Tuesday, June 6, 2023

tax year

by Hideo Nakamura
tax year

Tax Year
The tax year is an annual period used by governments for taxation purposes. It is generally aligned with the calendar year, but there may be differences depending on the country or region. For example, in the United States, the 2020 tax year begins on January 1st and ends December 31st; whereas in Japan, it runs from April 1st to March 31st of the following calendar year.

In regards to cryptocurrency, investors should note that any gains made from their crypto holdings during a certain tax year must be reported when filing taxes at the end of that period. The IRS views cryptocurrencies as property rather than currency and thus has specific regulations surrounding them which must be followed.

For example, if you buy a Bitcoin for $10 and sell it for $20 within one tax year then you would need to declare this gain of $10 when submitting your taxes (and potentially pay capital gains taxes). On the other hand if you hold onto that same Bitcoin until after another full tax cycle has ended (i.e., two years have passed) then you will only need to report any net gains/losses since that time when filing your taxes again next year (which could be either zero or more).

It’s important to keep track of all transactions made throughout each individual tax season as these records will serve as evidence in case of an audit by a governmental agency such as Internal Revenue Service (IRS). Furthermore some exchanges provide customers with 1099-K forms which list their total earnings over a given taxable period so make sure to get familiar with those documents too!

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