In partnership with Shannon Sparks
Cryptocurrency expert Abhinav R. Soomaney believes that wealth correlates with the freedom to set and pursue goals. He recently released his Amazon best-selling book, Cryptocurrency in a Nutshell, to guide investors toward financial agency.
As tax season soon approaches and the recent FTX scandal makes headlines, Soomaney offers money-saving tips.
Millions of investors have come to the cryptocurrency industry due to its blockchain-assisted decentralized alternatives to traditional banking. Cryptocurrency users conduct transactions that are public, nonreversible, timestamped and more immediate than traditional processes.
Acknowledging Bitcoin inventor Satoshi Nakamoto as foundational to cryptocurrency’s success, Soomaney’s book helps readers understand the parameters of blockchain technology. It outlines “factors affecting cryptocurrency prices, tokens versus coins, types of crypto wallets and how investors can keep their coins safe; comparison between the stock market and crypto market; importance of the white paper; the types of forks and what happens in each case; details about p2p (peer-to-peer) trading and cryptocurrency tax audits; how investors or traders can make investing tax efficient, staking rewards versus bank interest rates, taxation on staking rewards (and) DeFi (Decentralized Finance) crypto tax guide,” wrote Soomaney.
Since 2018, Soomaney has consulted with investors on cryptocurrency tax calculations and investment management. He has also spoken on global summit panels about the trajectory of cryptocurrency and blockchain.
Advice for Saving Money on Taxes
Soomaney recommends that cryptocurrency investors consider multiple money-saving strategies. “Do not store all tokens in one wallet. Split [them] between multiple exchanges and wallets to avoid complete loss especially when exchanges like FTX/Celsius crash or liquidate,” said Soomaney.
According to Soomaney, Highest-In-First-Out (HIFO) can minimize capital gains but can increase tax obligations in shifting long-term to short-term. “Minimize capital gains by using the Highest-In-First-Out tax calculation method that allows you to use the highest cost basis pool against the first sale until that inventory pool is completely exhausted. Maintaining accurate records for tokens transferred from one platform to another will help to determine whether the capital gain is Short-Term Capital Gain or Long-Term Capital Gain and accurately report taxes,” said Soomaney.
Soomaney also advises maintaining accurate records of tokens that are transferred across platforms. This will help determine short-term versus long-term capital gains in addition to ensuring accurate tax reporting.
Taxes vary depending on which attribute of cryptocurrency is being used. DeFi, NFTs (Non-Fungible Token), mining and staking all yield different money-saving tips.
“With very limited government guidelines, every step of the crypto tax space can be looked at as a challenge,” said Soomaney. “But we as crypto tax experts try our best to find a solution for all clients tailored to their needs.”
The FTX collapse and millions of people cashing out cryptocurrencies has impacted the industry-at-large. Soomaney advises that crypto users do thorough research of companies and periodically export trade history to protect their investor data.
Investors can learn more by visiting: https://www.cryptotax.co.in/cryptocurrency-in-a-nutshell and https://www.neumeistercpa.com/cryptocurrency-in-a-nutshell/
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