"They can't collect legal taxes from illegal money." ~ Al Capone
To begin... I am not a tax advisor, tax professional or an accountant of any type. Everyones situation is different and I WHOLLY encourage anyone looking into this to please please PLEASE check with your tax professional first before stepping into this.
So... that said, you wanna look into investing your crypto into an IRA, 401(k) or some other vehicle. Well, I am here to tell you according to the US tax code, you probably can.
Here is the link to notice 2014-21 stating its views on crypto.
- Q-1: How is virtual currency treated for federal tax purposes?
- A-1: For federal tax purposes, virtual currency is treated as property. General tax
principles applicable to property transactions apply to transactions using virtual
currency.
In order to invest in property with retirement accounts, an individual can use a self directed IRA. Pimco, Entrust and Equity Trust are all companies you can switch your existing IRA to or open a new one today with. Be sure to check with them prior to opening an account to see if they have any limitiations or restrictions on considering virtual currency as property.
If you are self employed, a sole proprietor or have consulting type income, then you can also use a 401(k). There are a number of companies who offer these types of services. Just google self directed IRA's for your personal income and IRA/401(k) consulting firms if you need to setup the structure for a different entity. Check with companies like IRA Financial Group and IRA Financial Services for more information about working these investments into your portfolio.
I am not going to tell you how to make it happen or what cryptos to invest in your retirement accounts. That is 100% up to you to decide. I will say please don't be a dumb ass and go all in. Even as a young person, I would say that 10-25% of your portfolio as speculative is a healthy number, but ultimately that is up to you to decide.
I know, you're thinking, WTF man, why am I here??
Because I am simply here to tell you that, you can.
You can use your crypto purchases or gains to invest in your retirement.
You can use your retirement funds to invest in crypto.
You can use crypto to offest sole proprietorship income.
If you missed the boat for 2017 you can still prep for 2018. It's a hard pill to swallow to realize you missed out on tax savings, but we are best if we learn to move forward with the knowledge we've gained instead of dwelling on how it could have made the past better.
There are many fancy ways to utilize your investment in crypto as a traditional style investment that can benefit you in the tax realm just as many other vehicles can. Just be sure that you have a solid tax guy and solid records for said tax guy to use when it comes time to settle the score.
