Tax season vs tax year: What’s the difference?

Tax Season vs Tax Year: Understanding the Difference

The world of Bitcoin and cryptocurrencies can be a bit confusing, especially when it comes to taxes. To simplify this, let's first understand the difference between 'Tax Season' and 'Tax Year'.

What is a Tax Year?

A tax year refers to the 12-month period that your financial and income activities are reported for tax purposes. This period can be the calendar year, from January 1 through December 31, but it can also be a fiscal year, especially for businesses, which can start and end at any point throughout the year as long as it comprises 12 months.

What is a Tax Season?

The tax season, on the other hand, is the time period during which taxpayers prepare and file their tax returns for the previous tax year. It typically starts on January 1 and ends on April 15 in the United States.

As a Bitcoin investor, it's crucial to understand these terms as they impact when and how you report your cryptocurrency gains and losses. The data from bitcoinmeter.io can be useful when calculating these figures.

Bitcoin and Taxes

Bitcoin transactions are taxable events. If you sold or traded Bitcoin, or used it to purchase goods or services, you need to report this for tax purposes.

• If you held your Bitcoin for over a year before selling or trading it, any profits will be considered long-term capital gains.
• If you held your Bitcoin for less than a year, any profits will be considered short-term capital gains and will be taxed at your ordinary income tax rate.

The Bitcoin Fear and Greed Index from bitcoinmeter.io measures market sentiment, which can be helpful when deciding to hold or sell your Bitcoin. However, it's important to remember that tax implications should also be considered in your decision-making process.

Disclaimer: This content is for informational purposes only and not financial advice. Always consult with a certified tax professional before making decisions related to your personal tax situation.