Looking to cash out your cryptocurrency without paying taxes? Here’s a step-by-step guide on how to do it.
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The taxman cometh, and he wants his cut. As crytocurrencies become more mainstream, the government is starting to pay attention to them. That means that if you’re cashing out your crypto, you need to be aware of the taxes you may owe.
In this article, we’ll outline how to cash out crypto without paying taxes. We’ll also give some tips on how to minimize your tax liability.
As always, we strongly advise speaking to a tax professional before taking any action with your crypto holdings.
What is a Tax-Free Cryptocurrency?
A tax-free cryptocurrency is a digital or virtual currency that is not subject to capital gains tax, income tax, or VAT. Cryptocurrencies that are considered tax-free include Bitcoin, Ethereum, Litecoin, and Monero. The most common way to cash out crypto without paying taxes is to use a cryptocurrency exchange that does not collect or report your personal information to the IRS.
How to Cash Out Crypto Without Paying Taxes
Use a Cryptocurrency Exchange That Doesn’t Require KYC
If you want to cash out your cryptocurrency without paying taxes, you need to use a cryptocurrency exchange that doesn’t require know-your-customer (KYC). KYC is a process whereby an exchange collects and verifies your personal information, such as your name, address, and date of birth.
There are a few exchanges that don’t require KYC, but they tend to be lesser-known and have lower trading volumes. This means that there may not be as many people trading on the platform, and it may be harder to find someone willing to buy your coins.
The most popular exchange that doesn’t require KYC is ShapeShift.io. This exchange enables you to convert between a wide range of cryptocurrencies, without having to create an account. However, ShapeShift does have a limit on how much you can trade without KYC – currently $10,000 per day.
Another popular exchange that doesn’t require KYC is Changelly.com. This exchange also has a daily limit of $10,000 for non-verified accounts.
These exchanges are popular because they offer a high degree of anonymity. However, this also means that they are not regulated in the same way as other exchanges. This means that there is a higher risk that your coins could be stolen or lost. If you are going to use an exchange like this, make sure that you only trade with coins that you can afford to lose.
Use a Cryptocurrency Exchange That Offers Tax-Free Withdrawals
There are a few cryptocurrency exchanges that offer tax-free withdrawals, which means you won’t have to pay any taxes on the profits you make when you cash out yourcryptocurrency. These exchanges include:
If you use one of these exchanges to cash out your cryptocurrency, you won’t have to pay any taxes on your profits. However, it’s important to note that these exchanges may still require you to pay taxes on the original purchase price of the cryptocurrency.
Use a Cryptocurrency Debit Card
A cryptocurrency debit card allows you to spend your cryptocurrency without having to cash out first. Essentially, you can use it like a regular debit card, but the funds will be taken from your cryptocurrency balance instead of your bank account.
There are a few different companies that offer crypto debit cards, but the one we recommend is Coinbase Card. Coinbase is one of the most popular and respected exchanges in the industry, and their debit card is one of the best on the market.
To use Coinbase Card, you’ll need to have a Coinbase account with a positive balance in either Bitcoin, Ethereum, or Litecoin. Once you have that set up, you can download the Coinbase Card app and link it to your account. From there, you’ll be able to use your card anywhere that Visa is accepted.
One of the great things about Coinbase Card is that there are no fees for using it. You will only be charged crypto mining fees when you make a purchase, and those fees go directly to the miners who process transactions on the blockchain.
Another advantage of using a crypto debit card is that it’s a easy way to cash out your cryptocurrency without paying taxes. When you sell cryptocurrency for cash, you are required to pay capital gains tax on any profits you make. However, when you spend cryptocurrency with a debit card, you are not selling any assets so there are no capital gains to pay tax on.
If you want to avoid paying taxes on your cryptocurrency gains, using a crypto debit card is one of the best ways to do it.
The best way to cash out cryptocurrency without paying taxes is to use a cryptocurrency exchange that allows you to trade for other assets, such as other cryptocurrencies or fiat currency. If you are looking to cash out in fiat currency, make sure that the exchange you use supports your country’s currency. If you are looking to cash out in another cryptocurrency, make sure that the exchange allows you to trade for that specific cryptocurrency. Finally, make sure to take into account any fees associated with trading on the exchange before making a decision.