Q: My daughter is unemployed and buys and sells crypto. Does she have to pay taxes on profits
I pay her bills and she receives no gov. benifits. I gave her 10000 to start. How much can she profit before paying taxes or does she have to pay anything on profits
A:
Yes, your daughter needs to pay taxes on any profits she makes from buying and selling cryptocurrency. In the United States, the IRS treats cryptocurrencies as property for tax purposes, which means that capital gains tax applies to any profits made from crypto transactions.
The amount of tax she owes depends on how much profit she makes and how long she holds the cryptocurrency before selling it. If she holds it for less than a year before selling, any profit is considered a short-term capital gain and is taxed at her ordinary income tax rate. If she holds it for more than a year, it's a long-term capital gain, which may be taxed at a lower rate.
There's no minimum threshold for capital gains from cryptocurrency trading; any profit is subject to tax. It's important for her to keep detailed records of all her transactions, including the dates of purchase and sale, amounts in U.S. dollars, and the gains or losses on each transaction.
Considering the complexity of cryptocurrency taxation, it might be wise for her to consult with a tax professional. They can provide specific guidance on how to report these transactions on her tax return.
Remember, timely and accurate reporting of cryptocurrency transactions is essential to comply with tax laws and avoid any potential issues with the IRS.
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