What are the tax implications of making annual contributions to a Roth IRA using earnings from cryptocurrency trading?

1 answers

• Nov 23, 2021 · 3 years ago
  When it comes to making annual contributions to a Roth IRA using earnings from cryptocurrency trading, the tax implications can't be ignored. The IRS treats cryptocurrency as property, so any gains from trading are subject to capital gains tax. If you hold your cryptocurrency for less than a year before making contributions, the gains will be taxed at your ordinary income tax rate. On the other hand, if you hold it for more than a year, the gains will be taxed at a lower capital gains tax rate. It's always a good idea to consult with a tax professional to get personalized advice and ensure you're on the right side of the tax laws.
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