Several of these changes will directly affect how much tax you owe for your cryptocurrency activities for the year ahead.
This piece is part of CoinDesk’s Tax Week.
Starting off, the amount U.S citizens can deduct from their taxable income – known as “Standard Deduction” – has been increased, meaning you get to hold on to a little more cash than the previous year.
2021 tax year
2022 tax year
Married, filing together
Married, filing separately
Head of household
Cryptocurrency-based activities that are treated as income in the U.S. include:
Federal income tax brackets
Changes are also being made to income brackets. These will affect how much tax you’ll owe for short-term held crypto assets (assets held for less than one year). Anything held for longer is treated as a long-term capital gain and subject to either 0%, 15% or 20% tax depending on individual or combined marital income.
$0 to $10,275
10% of taxable income
$10,276 to $41,775
$1,027.50 + 12% of amount over $10,275
$41,776 to $89,075
$4,807.50 + 22% of amount over $41,775
$89,076 to $170,050
$15,213.50 + 24% of amount over $89,075
$170,051 to $215,950
$34,647.50 + 32% of amount over $170,050
$215,951 to $539,900
$49,335.50 + 35% of amount over $215,950
$539,901 or more
$162,718 + 37% of amount over $539,900
Joint-filing married couples
$0 to $20,550
10% of taxable income
$20,551 to $83,550
$2,055 + 12% of amount over $20,550
$83,551 to $178,150
$9,615 + 22% of amount over $83,550
$178,151 to $340,100
$30,427 + 24% of amount over $178,150
$340,101 to $431,900
$69,295 + 32% of amount over $340,100
$431,901 to $647,850
$98,671 + 35% of amount over $431,900
$647,851 or more
$174,253.50 + 37% of amount over $647,850
Further Reading from CoinDesk's Tax Week
Crypto won’t save you from taxes, but it may eventually make them easier to pay, says futurist Dan Jeffries.
Tax guidance lags innovation. So does tax software. Meanwhile, misconceptions abound. If not careful, investors can end up owing more tax than expected and having to unload crypto to pay the bill
Investors in MicroStrategy, Tesla, Block and Coinbase need to consider how wild price swings will affect results, not only directly but indirectly due to complex tax accounting rules.
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