@RobertB4444 Thank you!
@pk Thanks a lot, that did make sense. I did some more research on what I want to do for now.
This is my current scenario:
Since I am new in the US, I do not have a car to commute and having to depend on uber/lyft to commute, which I feel is adding up to my expenses. And I can't get a loan, or even if I do, the apr is high as I literally do not have a credit history, I received my SSN 2 weeks ago and yet to get a credit card to start building my credit history.
And as you know, the used car market right now is really not good for buyers. So, I thought if I can sell some of my crypto and withdraw as USD, I can get a car(if possible, a new one itself) and that should solve a lot of my daily problems right now. But I wanna do it right, to ensure I am following the rules here by paying any income tax I am liable to pay.
Which brings me to my next question. To avoid the confusion of calculating cost basis for my crypto holding, I do have some amount of the stable crypto "USDC" and "USDT", which are pegged 1:1 with fiat USD.
So, if I transfer this to US exchange and withdraw, I guess there won't be anything to calculate, as 1 USDC = 1 USD and I will have to just add the amount I withdraw to my total taxable income and pay the tax as per the tax slab I fall under when I file my tax returns for 2022 in Jan 2023. Correct?
For example, say my annual taxable income as per W2 is $20,000. And say I send 10,000 USDC to US exchange and withdraw that to my bank account as $10,000. So when I file my returns in January next year, my taxable income will be $30,000. So my tax slab would be as below.
Which means, income tax I need to pay will be 1027.5+2367=3394.5
I haven't considered the already withheld tax by the employer here, above is just a calculation to confirm if my understanding in this scenario is correct.
Next question: I understand the above scenarios will be applicable once I have passed SPT and become a Resident Alien for tax purposes, so if I do the above transaction before I pass SPT, does that mean I don't have to pay tax on this in US and will only be dealing with paying tax in India? How do I show that I did this transaction while I was a Non Resident Alien during filing of tax return in Jan 2023?
Once again, thank you so much for taking time out to answer my queries!
