{"id":13780,"date":"2022-01-20T09:00:52","date_gmt":"2022-01-20T14:00:52","guid":{"rendered":"http:\/\/www.escapeartist.com\/?p=13780"},"modified":"2022-03-06T23:25:22","modified_gmt":"2022-03-07T04:25:22","slug":"4-ways-pay-zero-tax-cryptocurrency-gains","status":"publish","type":"post","link":"https:\/\/www.escapeartist.com\/blog\/4-ways-pay-zero-tax-cryptocurrency-gains\/","title":{"rendered":"4 Ways to Pay Zero Tax on Cryptocurrency Gains"},"content":{"rendered":"

4 Ways to Pay Zero Tax on Cryptocurrency Gains.<\/strong><\/h2>\n

September 9, 2021 – There are 4 ways to stop paying tax on your cryptocurrency gains. If you\u2019re tired of the IRS taking half your short term profits and 20% of your long term gains, here are 4 ways to pay zero tax on cryptocurrency gains without getting in trouble with the IRS. <\/span><\/p>\n

Note that this article is focused on US citizens and US persons (residents and green card holders). The United States IRS has declared that <\/span>cryptocurrency is an asset<\/span><\/a> or property, but not a currency. Therefore gains on cryptocurrency are treated the same as profits from the sale of a stock, rental real estate, or any other passive investment. <\/span><\/p>\n

If you want to avoid tax on your cryptocurrency profits, you must plan ahead. Here are 4 ways <\/span>to stop paying tax on your cryptocurrency gains and your <\/span>capital gains<\/span>.<\/span><\/p>\n

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Buy Crypto Currency In Your IRA<\/b><\/h2>\n

The easiest way to defer or eliminate tax on your cryptocurrency investments is to buy inside of an IRA, 401-k, defined benefit, or other retirement plans. If you buy cryptocurrency inside of a traditional IRA, you will defer tax on the gains until you begin to take distributions. If you buy within a ROTH, you pay zero tax on the capital gains earned in the account. <\/span><\/p>\n

To buy cryptocurrency inside of a retirement account, you must move that account outside of the United States and into an <\/span>offshore IRA<\/a> LLC<\/span>. Then that IRA LLC can open an offshore bank account and wallet to make the investment. <\/span><\/p>\n

You\u2019ll be the manager of the IRA LLC and in control of the investments. You\u2019ll be in total control of the account and the sole decision-maker.\u00a0<\/span><\/p>\n

To get your IRA offshore, you first form the LLC in a zero tax country. Then you move your account from your current custodian (such as Fidelity) to one that allows for offshore investments (such as Midland IRA). Finally you open an international bank or brokerage account and transfer the cash from your retirement plan into that account. <\/span><\/p>\n

From here, you write the checks or send the wires. You make the investments and can choose cryptocurrency. If you want to invest in foreign real estate, physical gold, or crypto, go for it. You can also use your IRA to get residency in countries like Nicaragua<\/a> or <\/span>Panama<\/span>. <\/span><\/a><\/p>\n

Because you are the investment manager of your retirement account, you must follow all the IRS rules. You can\u2019t borrow from the account, can\u2019t personally benefit from the investments, and must treat the IRA as a professional investment advisor would. That is, all decisions should be in the best interest of the account. <\/span><\/p>\n

If you already have a sizable retirement account, then buying cryptocurrency in your IRA might make sense. If you\u2019re young, and don\u2019t have a large retirement account, and can\u2019t quickly build a defined benefit plan, then consider the options below. <\/span><\/p>\n

Fyi\u2026 total annual contributions to your Traditional and Roth IRAs combined cannot exceed: $5,500 (under age 50) $6,500 (age 50 or older).<\/span><\/p>\n

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Buy Cryptocurrency In Your Life Insurance Policy<\/b><\/h2>\n

Another way to pay zero tax on cryptocurrency<\/a> gains is to buy coins within an international life insurance policy. You can fund an <\/span>Offshore Private Placement Life Insurance<\/span> with any amount of money you wish and create the equivalent of a ROTH or Traditional IRA. There are no contribution limits or distribution requirements. <\/span><\/p>\n