Bitcoin holders have a few months to take advantage of a tax loophole that could go away in 2022
Summary
Its one of the tax hikes Democrats are considering as a way to fund President Bidens $3.5 trillion in proposed spending to expand the U.S. social safety net. While Democrats face many hurdles to finalizing legislation and getting it passed in a deeply divided Congress, crypto experts are already looking at ways to help investors minimize their 2021 tax. Should the proposal pass, taxpayers have until Dec. 31, to take full advantage of the existing loophole, which allows crypto investors to sell coins at a loss for tax purposes and immediately buy them back. The IRS currently classifies digital currencies like bitcoin as property, so losses on crypto holdings are treated much differently than for stocks and mutual funds. But, because of the wash sale loophole, if this same person had previously harvested $40,000 worth of losses on earlier crypto transactions, theyd be able to offset the tax they owe.