Textbook Tax

Cryptocurrency transactions, while anonymous and decentralized, are subject to regulation by the IRS for all US taxpayers. Because of this, no matter your level of knowledge or complexity of dealings, if you have or plan to participate in any activity involving cryptocurrency, please continue reading to learn about the common taxable and non-taxable cryptocurrency transactions. By understanding how the United States taxes each crypto-related transaction, you will be a better crypto investor and trader and have a better understanding of your tax bill come tax season. Let’s start discussing the taxable and nontaxable cryptocurrency transactions based on US regulations. Crypto Tax: Taxable Transactions The following crypto transactions trigger capital gains or losses and may result in capital gain tax owed based on your capital asset activity. 1. Sell cryptocurrency for real currency When you sell cryptocurrency for USD, you have made a taxable crypto transaction. In other words, if you e...

The cryptocurrency market continues to rise in popularity in the U.S. and throughout the world. The decentralized finance ("Defi") sector has seen massive growth. Additionally, ease of access has increased as new and established companies offer crypto services and exchanges. As more and more individuals and institutions adopt cryptocurrency, it becomes more important for people to understand the tax laws and regulations governing the cryptocurrency industry. It is important to note that each country views and regulates virtual currency differently.  The scope of this article covers the crypto tax laws in the United States.  T he IRS defines virtual currencies as  digital representations of value that function as mediums of exchange, units of account, and/or stores of value. Further, t he U.S. views crypto as property subject to capital gains and losses for US federal tax purposes. Based on its designation as property, i n general, there are four taxable events when d...

A budget is a great financial tool to gain control and insights into your spending habits. Personal finance articles love using the "budget" buzzword; however, these same articles fail to mention the steps needed to develop an effective budget. Budgeting is not an easy task. Budgeting requires tracking, analyzing, and understanding your personal finances and expenses. By mastering the financial technique of budgeting, you will gain control of your financial situation. In my guide to budgeting series, I want to discuss money and finances in a manner that focuses in on the various techniques and methods people utilize to build wealth and financial stability. I am passionate about money management and spending habits, and so, I want to share  my insights about financial control and financial decision making. In doing so , I hope to answer the most popular questions asked in the personal finance category. The questions: How do I cut costs? How do I lower my expenses? How to s...

You may claim the home office deduction on your tax return if you used part of your home for business. U.S. tax law allows you to deduct expenses related to the business use of your home on your tax return. The tax deduction applies to both homeowners and renters as well as all types of homes. You determine the amount of expense related to business use based on a standard rate provided by the IRS or a calculated rate established by the percentage of your home utilized specifically for business. The two requirements to claim the home office tax deduction include: (1) regular and exclusive use and (2) principal place of your business. Because the COVID-19 pandemic required millions of people to work from home during 2020, many people are wondering if they can claim the home office tax deduction on their 2020 tax return. Below, I will explain in detail the home office deduction requirements to help you determine if you can deduct home office expenses on your tax return. Fair warning,...

As you know or will find out soon, the process of becoming a CPA is not easy! The act of preparing for, taking, and passing all four parts of the CPA exam requires hundreds of hours of hard work. During this seemingly never-ending and challenging journey, you will experience fatigue and burn-out; however, in my opinion, the worst thing you can do during the CPA exam process is take a long break from studying and taking the CPA exams. I passed all four sections of the CPA exam during a six-month period. Luckily, I did not have to retake any of the exams, which is a common occurrence as the average passing rate is around 40-50% per exam. Having personal experience dealing with the CPA exam process, I want to share valuable tips for conquering the CPA exam. By the time I reached my final exam, I felt confident in my study routine. Most importantly, I felt that my process for preparing for each exam improved each time. I learned how to prepare more efficiently, which saved me lots ...

Before the COVID-19 shutdown, the ability and choice to work remotely from home was growing in popularity. The popularity of remote work continues to grow thanks to advances in telecommunication technologies, which allow individuals to work remotely outside a traditional office environment while still remaining personally and collaboratively productive. Now, as the entire workforce proved its ability to successfully work from home during the shutdown, I expect exponential growth in remote work offerings. Because of remote work culture, we will see an increase in the number of people working remotely for companies that are based in different states. Remote work outside of your company's state will affect your tax situation. Below, I will explain how and where you pay taxes if you work remotely. Related Posts -  Unemployment Income: What to know about unemployment income if you've been laid off or furloughed -  Understanding your Form W-2 -  State Tax Refunds: Are sta...

It is very possible that you live in one state and work in another. If so, you may face some confusion while filing your tax return. State laws may require you to file a tax return in multiple states, increasing your chance of error during the tax return process. Other situations may also require you to file a tax return in multiple states, including but not limited to moving during the tax year or having a short term job/internship in another state during the tax year. If you work in one state and live in another or face a similar situation, please continue reading below to learn about the tax reporting requirements of living in one state and working in another. Related Posts -  File your taxes online for free: The IRS Free File Program -  State Tax Refunds: Are state tax refunds taxable? -  Four reasons why you should file your tax return early -  Tax Tips for Bloggers: Four things every blogger should know What are the tax filing requirements when wor...

Textbook Tax presents its monthly tax news update. A quick read discussing various tax news, tax stories, and tax events trending in the world of tax during the month. The following tax topics cover the month of April 2020. The tax topics presented represent my favorites in tax news and tax-related events. Please comment any tax news stories you found interesting for the month of April. Additionally, please email me or connect with me on social media for the monthly tax news update sent straight to you! Related Posts -- Prior Weeks' Tax News -  January 2020 - February 2020 -  March 2020 COVID-19 News  -  Coronavirus (COVID-19) Tax Impact - Will you get a stimulus check? Explaining the $2 trillion stimulus package -  Coronavirus (COVID-19) Tax Impact - Relief from timely filing of 2019 Federal income tax returns Tax News for April 2020 Tax Topic: Many countries easing the tax residency rules due to the virus Tax Story Summary: Severa...

The U.S. tax return filing due date is April 15 each year. Additionally, you may choose to file an extension that extends your tax return filing due date to October 15 (Please see  Tax Extension: How to file a tax extension? ). Because of COVID-19 and the related economic shutdown, the IRS granted all U.S. taxpayers with April 15 due dates an automatic tax return filing extension to July 15 (Please see  Coronavirus (COVID-19) Tax Impact - Relief from timely filing of 2019 Federal income tax returns ) . However, while your tax return is now due on July 15, you should still file your 2019 tax return early. Like any task, it may be tempting to procrastinate filing your tax return, but by doing so, you may face issues later on relating to your taxes and information. Therefore, you should file your tax return as soon as possible. Below are four reasons why it is beneficial to file your tax return early. Related Posts: -  The Complete List of Tax Credits for Individu...

As virtual currency trading and ownership continues to grow, the U.S. regulatory policies and guidance remain vague, confusing, and inconsistent. However, based on current law, tax planning methods exist to help you lower your crypto tax bill. In the current regulatory environment, a tax loophole, or a tax planning strategy to legally reduce your tax liability, exists for crypto traders. The tax strategy focuses on the applicability of the Wash Sale rule as it relates to trading cryptocurrencies. It is important to note that the regulatory environment surrounding virtual currency is rapidly evolving, and so, crypto traders should remain up to date on newly released crypto guidance and policy. Below, I will detail the wash sale rule as it relates to trading crypto as well as explain the tax strategy for lowering your cypto tax bill. Every crypto trader should know the wash sale tax tip. Related Posts -   Cryptocurrency Taxation: How does the U.S. tax cryptocurrency? -  Ta...