What happens when you sell crypto?

When you sell cryptocurrency that you have held for a year or less, the profits you earn are taxed as ordinary income. This means that the tax rate applied to these profits will be the same as the rate applied to your other sources of income, such as your salary or wages.

On the other hand, if you hold the cryptocurrency for more than a year before selling it, your profits will be taxed as capital gains. Capital gains tax rates are generally lower than ordinary income tax rates, which can result in a significant tax savings for many people.

In addition to its trading and wallet services, BTCC also offers a range of educational resources to help individuals learn more about cryptocurrency and the blockchain technology that underpins it. These resources can be particularly helpful for those who are new to the world of cryptocurrency and are looking to gain a better understanding of how it works.

The reason for this difference in tax rates is that the government views long-term investments, such as holding cryptocurrency for more than a year, as less risky and more beneficial to the economy. As a result, they are taxed at a lower rate to encourage individuals to make such investments.

It is important to note that the tax treatment of cryptocurrency profits can vary depending on your specific situation and the laws in your country. Therefore, it is always a good idea to consult with a tax professional to ensure that you are complying with all relevant tax regulations.