Crypto Tax and a New Identity
Learn how cryptocurrency taxes work with a new identity with Amicus experts.
As a United States citizen, you owe taxes on your worldwide income unless you have a new identity. This is a fundamental rule that applies to all citizens. However, navigating cryptocurrency taxes can be particularly challenging.
Cryptocurrency as an Investment
Most people hold cryptocurrency as an investment. Under the current Internal Revenue Service (IRS) virtual currency guidelines, cryptocurrency is treated as a capital asset. Therefore, the tax you pay on it is capital gains tax. Cryptocurrency can also be received as income, which has different tax implications.
Types of Capital Gains
You pay capital gains taxes depending on the type of capital gain you have. The two types are short-term and long-term capital gains based on how long you hold the asset. Short-term capital gains occur when you sell cryptocurrency for more than you bought it and have the investment for a year or less. These are taxed at your ordinary income tax rate, similar to wage income.
In contrast, long-term capital gains are realized when you sell cryptocurrency for more than you bought it but hold the investment for more than a year. These gains are taxed at more favourable long-term capital gains tax rates, which can be as low as 0%. It’s essential to realize that virtual currencies are relatively new, and the IRS or Congress may change their stances on crypto taxes in the future.
Options to Avoid Cryptocurrency Taxes
So, what are your options to avoid paying taxes on your cryptocurrency? Here are several strategies:
- Buy crypto in an IRA: With the uncertainty of how future tax regulations will change, this can be a risky option.
- Move to Puerto Rico: You must become a bona fide resident of Puerto Rico and live there.
- Declare your crypto as income: This means paying a higher tax rate than capital gains tax.
- Offset crypto gains with losses: This method is subject to ever-changing tax regulations.
- Donate to charity: You have to tell the IRS where your donation came from.
- Please leave them in your crypto wallet forever: This is what 98% of crypto investors are doing now.
- Acquire a new legal identity: In a country with no taxes on cryptocurrency, this option provides complete protection from ever-changing tax regulations.
How a New Identity Provides a Safe Option
A new identity gives you options for protecting your crypto assets by providing an entirely new legal crypto identity without connecting to your previous identity. With our 90+ years of combined experience, Amicus International can assure you that you will receive a brand new second citizenship and a new identity. This service is backed by our trust and confidence in our client’s cases.
Case Study: Successful Identity Change
John, a successful crypto investor, faced increasing scrutiny from tax authorities. Worried about future tax implications and wanting to disappear legally, he turned to Amicus International. We helped John acquire a new identity in a tax-haven country. He enjoys complete identity protection and peace of mind, knowing his crypto assets are safe from prying eyes.
Amicus International’s Trusted Services
Amicus International Consulting has been trusted by many unique individuals worldwide who have found themselves in difficult situations for which we have found solutions. We offer crypto-rich clients a path to a second passport in tax-haven states, with a completely new identity to exempt them from capital gains taxes on cryptocurrency holdings. Moreover, Amicus works with each government’s residence- or citizenship-by-investment programs to create a new identity for our clients.
How It Works
Amicus helps hundreds of people from countries like the U.S., the U.K., Australia, and Canada obtain a second passport in one of seven countries: Saint Kitts and Nevis, Antigua and Barbuda, Dominica, Vanuatu, Grenada, Saint Lucia, and Portugal. The company works with each government’s residence- or citizenship-by-investment programs. Unlike other companies, we can provide a new identity.
“It’s an attractive way to draw foreign investment, especially in countries with few natural resources,” said Ernest Marais, an attorney for the international tax law firm Andersen. Marais has significant experience advising clients on cross-border tax structuring and avoiding an IRS crypto tax. He told CNBC that this kind of passport purchasing scheme is commonly found in tax havens, sometimes called “International Finance Centers.”
Case Study: New Identity Creation
Sarah, an entrepreneur from the U.K., wanted to protect her growing cryptocurrency portfolio. Concerned about future tax laws and seeking identity protection, she approached Amicus International. We facilitated Sarah’s identity change, providing her with a new birth certificate and no connection to her previous identity. Now, she enjoys the benefits of a safe disappearance and a secure future for her crypto investments.
Case Study: Legal Identity Change
Michael, a Canadian tech entrepreneur, was increasingly worried about the tax implications of his substantial cryptocurrency earnings. He contacted Amicus International for help. We provided Michael with a new legal identity in a jurisdiction favourable to crypto investors. As a result, Michael now enjoys tax benefits and privacy, allowing him to focus on growing his business without tax-related stress.
Case Study: Protecting Crypto Assets
Laura, an Australian crypto trader, faced a significant tax burden due to her trading activities. Seeking a solution, she turned to Amicus International. We helped Laura obtain a second passport and a new identity in a crypto-friendly country. This move reduced her tax liability and protected her crypto assets from future regulatory changes.
Technically Legal
Unlike tax evasion, when an individual deliberately hides their income, tax avoidance is perfectly legal, even if large swaths of the population deem it unfair to use a new identity. Marais points out that the IRS and tax authorities are ramping up their efforts to trace digital currency holdings via some centralized crypto exchanges.
“The IRS’ reach is global, especially with the Foreign Account Tax Compliance Act,” he said. Feldhammer was with the IRS Counsel when it made significant inroads in taxing U.S. taxpayers who intentionally hid assets offshore to avoid U.S. taxes. “Through a combination of informants, changes in the laws, and significant international pressure, it is now tough for a U.S. person to hide assets overseas,” said Feldhammer.
Future of Crypto Tax Regulations
“The U.S. can do the same thing for crypto and is already contemplating changing its laws to do just this.” The U.S. Department of the Treasury has proposed comprehensive reporting for crypto, making it as challenging to spend crypto as cash without it getting reported. Furthermore, the IRS cements efforts at home to track non-compliant U.S. taxpayers using John Doe summonses. This tool allows the government to obtain information about many unidentified taxpayers. In this case, the warrants were issued to different crypto exchanges to find people who conducted at least $20,000 of cryptocurrency transactions from 2016 to 2020.
Feldhammer says issuing these summonses one exchange at a time is a clumsy way to capture non-compliant U.S. taxpayers, but it can be effective. This is why many exchanges avoid Americans altogether. Marais tells CNBC that Valr, the second-largest crypto exchange in South Africa, doesn’t touch U.S. citizens.
Though Amicus International Consulting isn’t breaking the law, it endures the scrutiny of law enforcement agencies worldwide. However, it continues to protect and guard its clients’ privacy.
Conclusion
Navigating cryptocurrency taxes can be a complex and ever-changing landscape. Acquiring a new identity offers a viable solution for those looking to protect their crypto assets and avoid hefty tax bills. With Amicus International, you can achieve a safe disappearance and complete identity protection. Our expertise and commitment to client privacy make us the trusted choice for creating a new identity. Learn more about how we can help you with your cryptocurrency tax challenges by contacting Amicus experts today.
If you would like to work with a professional team that can help make your transition to a life of freedom, contact Amicus Int. for New Identity services today.
