How To Not Pay Tax On Cryptocurrency | Top 8 Legal Things To Do

Cryptocurrency has become a hot search on the internet in recent years. With the USA ranking among the top 5 in the global cryptocurrency market, its demand is increasing daily. In this case, netizens also want to save taxes. How to not pay tax on cryptocurrency is a tricky question, but it isn’t impossible. There are various legal ways in which you can save taxes on cryptocurrency.

not pay tax on crypto

After all, To save tax on cryptocurrency, you need to minimize your taxable income either by gifting it to your friends and family or donating to charity. You can also use the wash sale rule or a self-directed IRA. HODL and moving out of the U.S. should be your last option regarding tax savings on cryptocurrency. However, you can consider them.

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Basis Of Taxation On Cryptocurrency

The IRS doesn’t consider crypto a form of currency. It is treated as property and states that all the general tax principles which are applicable to properties and virtual currencies. This signifies that you need to pay taxes on any cryptocurrency gain. To know how to not pay tax on cryptocurrency, we first need to know about its basis of taxation. There are two ways how a tax is charged on a cryptocurrency.


Firstly, if you have a profit by selling cryptocurrency, it will come under capital gain. This is fairly identical to selling a piece of property. The IRS has stated that gain or loss is derived from the fact crypto is a capital asset in the hands of the taxpayer. Such as Bonds, investment properties, and stocks can normally be considered capital assets. 

The capital gains taxes are charged based on the time period. 

Short-term capital gains tax – These are gains on assets kept for a shorter period of time which is less than a year. They have higher rates which range from 10% to 37%.

Long-term capital gains tax – this is applied to property that has been in the owner’s possession for a longer time period exceeding the limit of one year. Compared to the short-term capital gains tax, which has rates between 0% and 20%, they are less expensive. 

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Income or Property Gain

It would be best if you determined the cryptocurrency’s market worth at the moment you get it when you accept cryptocurrency in exchange for goods or services. This gain is taxable to you. And if you give away cryptocurrency in exchange for something else, it s considered a taxable event. And you are charged for it as ordinary income.cryptotab This includes making money through crypto-related activities, including mining, staking, airdrops, and more.

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How to Not Pay Tax on Cryptocurrency?

This article will help you know more about How to Not Pay Tax on Cryptocurrency and will provide you with an app to help you with cryptocurrency trading

Minimizing The Taxable Income

A good way to how to not pay tax on cryptocurrency is minimizing the taxable income. To do this, one needs to closely examine the tax laws of their nation to identify tax breaks and credits that can reduce their taxable income.

minimizing the taxable income

What you can do is utilize it to pay for costly medical procedures, invest in health savings accounts, or you can also donate it to charity. Asking a tax expert may also be beneficial because numerous tax deductions can be beneficial to you.

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Employ A Self-directed IRA

IRA means individual retirement account. The IRS classified Bitcoin as “property” in 2014, making it comparable to equities and bonds. Anyone with earned money can open an IRA, a private form of a 401K retirement savings plan. In most cases, brokers, banks, and financial services firms manage them.

You can use IRA to sell and buy cryptocurrencies through a self-directed IRA. There is no taxation on crypto gains and exchanges. Alternatively, you cannot reduce the number of your taxable gains by incurring losses.ira account

There are various IRAs available, and it’s up to you to choose the ones which you prefer. Remember, only you can save the taxes when you start withdrawing the funds from the IRA account.

Gifting the Crypto 

How to not pay tax on cryptocurrency? It might shock you, but crypto can be gifted to your family, relatives, or even your friends in case you want to save taxes on them.

gifting the crypto

You can gift up to $15000 per person, and the recipient doesn’t need to pay tax on it. Suppose you cross a limit of $15000, and then you would be liable for filing a gift tax return.

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Wash-Sale Rule

When the cryptocurrency you purchased has decreased in value, you can sell it and immediately purchase it again. You can still claim the capital loss in this manner on your tax return. Do keep in mind this way, you can only delay the taxes but can’t avoid them entirely.



HODL means hold on for dear life. It’s a popular cryptocurrency strategy in which you buy crypto with keeping in mind to pass it to your coming generations and not selling it in your lifetime. Not selling it means no tax applies to it. However, the drawback is you won’t be able to use it for your good.

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Turn the Short-Term Gains into Long-Term Gains

As simple as it sounds, the tax payable on short-term capital gains is relatively more than the long-term gains. So, if you want to pay fewer taxes and save on taxes, keep your assets for more than a year and then sell it.

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Move to the Cryptocurrency Tax Haven

There are many countries where cryptocurrencies are not subject to taxation. Change your citizenship and relocate if you want to save money on cryptocurrency taxes. This way, you would not be liable to pay taxes to the U.S. tax fund. hong kongAnd if the country you would be moving to doesn’t charge crypto taxes, you will no longer have to pay taxes on cryptocurrency. Some of the countries you can consider moving to are Georgia, Hong Kong, Bermuda, Gibraltar, Estonia, Switzerland, Germany, Malta, etc.

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Sell in a Low-Income Year

This is one of the good ways how to not pay tax on cryptocurrency. So, We recommend you sell your assets in years when you have made a low income this way, so that your tax capital would be less than when you have made huge profits.

sell in a low-income year

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Countries that don’t charge taxes on Cryptocurrencies?

Some of the countries you can consider which don’t charge taxes on cryptocurrencies are Georgia, Hong Kong, Bermuda, Gibraltar, Estonia, Switzerland, Germany, Malta, etc.

What is Short-Term Capital Gain?

When you hold an asset for a time period of less than a year, it comes under short-term capital gains. In contrast to long-term capital gains, this typically has a higher tax burden.

In what ways cryptocurrency taxable income can be reduced?

To reduce the taxable income, you can utilize it to pay for costly medical procedures, invest in health savings accounts, or you can also donate it to charity, or gift it to family and relatives or friends.

What does a cryptocurrency tax haven mean?

A cryptocurrency tax haven means places, where cryptocurrency is exempt from a variety of taxes, as opposed to countries with strict regulations like the U.S. Blockchain use, has been widespread in tax havens, such as Malta, Singapore, and the Cayman Islands, making it simpler for those who are already familiar with the cryptocurrency market.


Cryptocurrency has been popular for quite a while, making many interested in this new way of trading income and profits. People who have been doing cryptocurrency trading for a while now know how much taxes are charged to them, especially in a country like the USA. And they are always looking for how to not pay tax on cryptocurrency. Though it sounds easy, it is not. Yet, we have provided you with eight ways in which you can save your crypto taxes.

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Aloukik Rathore is a Delhi-based entrepreneur, gadget lover, and absolute geek. He loves spending time learning about new innovations and runs a digital marketing company, Cannibals.