Our weekly crypto newsletter is here! In this issue, you will learn more about what you can do to extend your tax deadline and accurately file your crypto taxes and the role crypto will play in the US midterms. We also have a trading tip for you!
US Tax Deadline is on April 18, 2022 – Are you ready?
The unextended due date for 2021 personal income tax returns is Monday, April 18. The keyword here is unextended. What does this mean? By filing Form 4868, you can extend the due date of your tax return from April 18, 2022, to October 17, 2022. This will give you six more months to complete your tax return and ensure all your crypto tax reporting is in order.
Why should you extend?
There are many ambiguous areas in the crypto tax law as of today, and different positions could be taken, as evidenced by the Jarret case.
Extending your tax return will give you more time to see what regulatory developments occur between now and then that could help you further optimize your crypto taxes. Beyond this, you give yourself more time to ensure your crypto portfolio is 100% correct rather than rushing for the Monday deadline.
One thing to keep in mind is that the extension is an extension of time to file but not to pay, so you need to estimate your payment if you anticipate owing. You can always get a refund for the overpayment or apply it to next year’s taxes. If you are scrambling to get things done, simply extend your tax return and make things easier for you and your tax preparer.
If you have further questions, refer to our 2022 Crypto Tax Guide USA – Quick Answers Version!
Crypto in the US midterms: PACs
Crypto-linked political action committees (PACs) have sprung ahead of the US midterm elections. One of the more prominent PACs is American Dream Federal Action to be launched by FTX Digital Markets co-CEO Ryan Salame aimed at supporting Republican candidates. Salame’s PAC is initially investing $4 million and its agenda, besides crypto, focuses on economic and national security. In light of the midterms, crypto has scrambled partisan lines, with candidates from both the Republican and Democrat parties finding reasons either to endorse it or vocally reject it. As a result, generational lines have started playing a much more prominent role.
Trading tip: Timing the bottom
Everyone wants to buy low and sell high. The real challenge is predicting when a crypto asset has truly bottomed and when it still has more downside. Unfortunately, most investors are really bad at calling bottoms in the volatile crypto market. There are, however, some specific indicators that can be helpful. The most important one is Bitcoin.
Keeping a close watch on the BTC price is essential if you are trying to buy the low of any crypto token you want to add to your portfolio.
For the most part, crypto-assets rise and fall with BTC, so being able to tell when Bitcoin’s price has bottomed (or is about to bounce) should ideally inform your actions in the broader crypto market. Volume is another important indicator to watch. A token’s price is likely to initiate a trend reversal if its trading volume starts to increase steadily.
For other trading tips and strategies, make sure you check out our Crypto 101 Guide.