If you've sold or exchanged any crypto in 2021, the IRS wants to know. Henry Yoshida, Co-founder & CEO, OF Rocket Dollar joined Cheddar's Opening Bell to discuss which crypto activities are taxable and how to best spend your tax refund.


Opening Bell

Filing Taxes If You've Sold or Exchanged Crypto in 2021

This next segment is brought to you by Jackson Hewitt online offering you a flat low price of $25 to file your taxes online. Well if you've sold or exchanged any Cryptocurrency in the past 12 months, the I. R. S. Wants to know about it. And with tax day, just under two weeks away, our next guest has some tips and tricks for those of you who own crypto or any alternative investments joining the show. Now, Henry, Yoshida Henry is co founder and Ceo of Rocket Dollar. That's an alternative ira platform allowing investors to tap into opportunities like real estate private equity as well as of course crypto Henry, welcome to the show. So when it comes to filing taxes, what do taxpayers need to know most if they've added crypto to their financial portfolio in the last year? Yeah, so crypto, they've pretty much determined at this point that it's going to be taxed like property, so it's going to work very very similar to stock. So if you if you bought, if you bought crypto and then you sold crypto then effectively you are going to have to pay taxes on that particular gain. If you hold it for less than a year, it's going to be short term. If you hold it for more than a year, it'll be long term. Uh and I hope you don't mind me saying it does not sound as if the dogs there at your house are interested in paying taxes on Cryptocurrency. No no to listen this is live tv man. My dog at home goes off all the time. So I totally understand it here let's talk about N. F. T. S. Here are digital collectibles in the form of N. F. T. S. Considered art which the taxpayer sort of. No with regards to what the IRS is looking for in the world of non fungible tokens. Henry. Yeah. So you know I've talked to a lot of tax professionals and they've kind of determined that they're gonna tell their clients that they're going to tax these as art and collectibles. So that's a very big distinction because you need to know that art and collectibles are actually taxed at a higher rate uh than regular stock and and potentially property and slash crypto purchases. So the top tax rate for N. F. T. S are actually gonna be 28% this year, wow. Uh Now for those who do own alternative investments, would you say hiring a professional is even necessary or filing them yourself even suffice. Yeah I think that you know I've also talked to a couple of providers who do taxes too. So let's say the digital providers they've actually added capabilities to help people talk about crypto taxes. I might actually say that it's probably dependent on the level of investments that you have. So if you're someone who's trading in the or made transactions in the six figure range is then I'd say probably it makes sense to go get a professional but if you're basically you dabbled in it and a lot of people, millions of people dabbled in crypto for the first time last year and then maybe a lesser percentage dabbled in N F. T. S. Then you might be able to use some of the existing providers just to get some tax ticks on that because there's gonna be some nuances in there. Sure. And what are some of the most common questions that you hear from people when filing? Yeah, so the the common questions are that, I think it's hard to get reporting essentially uh for crypto. So it's really hard to get statements from the particular providers. So right now I'm actually facing this problem right now, I have various accounts of various exchanges and not all of them are very good at the reporting in particular. So that's making it hard for me. So I think if you press your providers get the reporting and if you have the reporting it's, it's going to fall very much in line with how you might have paid taxes or deal with taxes on current investments that you have. Yeah, absolutely. While we have, you, can you help break down some smart, financially responsible investments that taxpayers can make with their tax refund? That's going to be top of mind for many. Yeah. Look, you know, tax refund, I mean, you know the definition of a tax refund is that you effectively gave a 0% loan to the United States government. So if you're due a refund, that just actually means that you overpaid to those particular providers. So what you need to effectively do, I think a very smart tactic is that you should actually take advantage of that. Maybe use it as a way to contribute to an ira yourself if you qualify to do so and then now you have the ability to invest that money going forward um if you are pretty burdened with debt. So you guys did a segment earlier on student loan debt. I'd say that another smart tactic is to actually pay down some of that debt and if you have any leftover, make that contribution to a Roth ira, if your income qualifies you as such, if not a regular ira, that's a great way to use your tax refund. Absolutely. Now with inflation at the top of mind for many americans right now, what are some of the best investments to protect your portfolio against inflation? Yeah, so you know, for me, the best investments to protect against inflation are actually, it's probably gonna be your growth stocks. So you need something that's going to outpace inflation. So inflation is at the highest rate has been in 40 years. So the only way you're gonna be able to surpass that from an investment perspective is to be an equity owner, that's going to be in companies and property real estate, whether that's in stocks possibly even crypto for a small percentage and something else tangible assets, things that can outpace inflation. That's where you need to have your money. Alright, my special thanks there to Henry, Ishida. Henry is co founder and ceo of rocket dollar and find out how you can file your taxes online for a flat price of $25 guaranteed even for complicated returns, visit Jackson Hewitt.com to learn more.