Understanding the difference between long- and short-term gains can be a super helpful way to lower your taxes on cryptocurrency gains and make the best choice when it comes to disposing of your assets.
This guide will give a basic overview of what determines long-term and short-term capital gains, and you'll find some tips on how to identify long- and short-term holdings within your TaxBit account.
What you'll find:
- The difference between long- and short-term gains
- Where can I see long- and short-term gains on TaxBit?
The difference between long- and short-term gains
Determining your long-term gains and your short-term gains is actually a very simple process! In short, realizing a long-term gain means that you've disposed of an asset after a year or more of owning it. A short-term gain is realized when you acquire and dispose of an asset in under a year's time.
For example, if you purchase one bitcoin (BTC) on January 1, 2020, and sell it on May 1, 2021, the profits from this disposal will be taxed at the long-term rate. However, if you were to sell it on February 1, 2020, this would be a short-term gain (or loss).
Typically, long-term gains are taxed at a lower rate than short-term gains, but you can learn more about cryptocurrency tax rates HERE on our blog.
Where can I see long- and short-term gains on TaxBit?
There are several ways to see your long-term and short-term gains on your TaxBit account. The best way to view your long-term and short-term gains is by checking your 8949 tax form on the "My Taxes" page of your account. Here, you'll see that all of your capital gains and losses are divided by long-term and short-term gains.
However, you'll only be able to view 8949 forms for completed tax years. In other words, you won't be able to download an 8949 for a calendar year that has not yet ended.
Rest assured, though: you can still download your past 8949s depending on which plan you’re on. You can check out more about what each plan has to offer on this guide HERE.
You can also click on individual assets in the "My Transactions" page as well as the Tax Optimizer to see what dates they were acquired. Keep in mind, though, that you won't be able to choose a specific asset to dispose of in order to realize a long- or a short-term gain/loss. This will be determined by the accounting method used on your account.
Still have questions? Send us an email at firstname.lastname@example.org or chat with us using our live chat feature, and we'd be happy to help!