Top 5 Crypto Tax Predictions in 2023

Crypto and taxes are quickly evolving worldwide, with a lot of changes and trends coming next year for investors.

As we enter 2023, let’s delve into some of our predictions for crypto taxes in 2023, how investors can prepare for them, and some tips to optimize your crypto tax situation.

Will 2023 be good for crypto?

2023 may be the year when crypto bounces back from the bear market felt during 2022.

2022 brought the war in Ukraine, rising inflation and interest rates, and an 80% retracement on major digital assets.

2023 may be the year of recovery for the leading digital assets and the appearance of new players, given the elimination of some providers.

#1: Crypto-friendly countries get harsher taxes with new bills

With the global trends of regulations, we believe there will be fewer countries with an absence of crypto taxes or with a lot of tax-friendly measures for investors.

This trend started in 2022, with countries like Portugal, a crypto-tax haven for several years, passing new bills to tax cryptocurrencies.

With the efforts of the EU, Australia, the UK, and the US to enforce new regulations, we believe this trend will expand to other regions and limit the options for investors wanting to move.

Check the list of the most crypto-friendly countries you can still move to or the top tax-friendly US states.

#2: Tougher tax and legal compliance laws for crypto providers

The effect of new regulations worldwide, from the US to Asia, will bring tighter measures for crypto providers, from exchanges to wallets, in relation to their customers.

The effect may be positive in bringing maturity and protection to the space, but due to situations like the FTX debacle, it also may bring measures that hinder innovation and set the industry back.

We will be paying more attention to the MiCA bill in the EU and the developing regulations in the US and their impact.

#3: High tax bills to pay despite big losses in 2022

Investors who sold crypto in early 2022 may have had big wins but not necessarily be liquid from those gains to pay the taxes coming in 2023.

If investors only sold their crypto for stablecoins but remained in the market, they may have been victims of the many scams and fallouts that led investors to lose their profits.

In this scenario, big tax bills are coming, but few deduction opportunities for individual investors to write off the losses from these situations.

#4: New regulations will bring more compliance needs for crypto companies

The new trend of regulations will bring more clarity to consumers and new guidelines for institutions dealing with crypto.

With new requirements due to increased oversight by regulators, crypto companies will need more portfolio tracking tools and accounting procedures.

CoinTracking can help companies, from crypto tax firms to funds, in the quest to mingle regulations with crypto.

#5: Multiple jurisdictions impose different types of taxes on crypto transactions

Different tax authorities (federal, state, and local) may impose different types of taxes on crypto transactions, making it more costly to get involved in crypto and bringing more headaches to people in the crypto space regarding tax compliance.

One hot topic recently drawing people’s attention is the application of sales tax on certain crypto transactions by over 30 states in the US.

With this measure, in addition to paying income taxes to federal and states, you may also be subject to sales tax when you have crypto transactions such as NFT sales.

The best crypto tax software: CoinTracking

The best crypto tax software in the market is CoinTracking.

You can import your trades using CSV or API, track your gains/losses, and generate tax reports according to your preferred accounting method.

CoinTracking is your full crypto tax solution for:

• Importing (API & CSV) your trades from 110+ exchanges.
• DeFi and NFT support with our ETH+DEX importer.
• Importing your Binance Chain, Binance Smart Chain, and MATIC transactions.
• 25+ advanced reports, including which coins offer you a tax-free rate.
• Automatic capital Gains, according to 12 accounting methods (e.g., FIFO, LIFO, HMRC, ACB), accepted worldwide.
• Generating complete Tax Reports in your country.

Moreover, CoinTracking can easily classify all your earnings from yield farming, liquidity pools, crypto staking, and much more.

Crypto taxes with no errors: CoinTracking Full Service in the US.

CoinTracking also offers a Full Service for US traders. A crypto reconciliation tax expert from Polygon Advisory Group, a leading US crypto tax firm, will review your CoinTracking account, help fix any errors, and ensure you submit your crypto tax reports error-free.

This post is part of the Crypto Taxes AMA series. Follow our weekly AMAs on Twitter where our expert CPA, Sharon Yip answers your crypto tax questions. You can download 35+ AMA crypto tax reports for free.

Disclaimer: All the information provided above is for informational purposes only and should not be considered as professional investment, legal, or tax advice. You should conduct your own research or consult with a professional financial advisor when investing.