Crypto Gains Tax

[Mecka]

Hey All,

I’m trying to tie up my taxes but my Crypto Short-term gains are being taxed at 32.7% -  my current income tax bracket, however, is lower than that.  I spoke with product support and they stated I needed live tax help but I’m not dropping $70+ to speak with someone regarding a potential software miscalculation.  I thought about manually adjusting my gains to properly reflect the actual amount of taxes which should be taken out but obviously, while amounts would be correct, my crypto data would not.  Thoughts?

[HelenC12]

Take a look at your supporting tax schedules and calculations to see how your Crypto gain is being taxed. 

One reason may be because your crypto short term gains are self-employment income. If you entered your crypto transactions as self-employment income, you have to pay self-employment tax. What that means is, your crypto short term gains are taxable as ordinary income plus the income is also taxed for Social Security (tax of 12.4%) and Medicare (tax of 2.9%). 

Some other reasons why your tax rate is so high may be due to the fact that if you have a very large gain, you may be getting hit with the Alternative Minimum Tax  and/or the Net Investment Income Tax. 

[Mecka]

Thank you for replying.  

It’s not entered under Self-employment income and it’s only a small amount of capital gains profit (under $1500).  I’m really not certain what the reason for it is.

thanks 

[JamesG1]

If you paid a capital gains tax, it may have been reported on a Qualified dividends and Capital Gain Tax Worksheet.

The form can be viewed here at page 36.

The worksheet can be viewed at Tax Tools / Print Center / Print, save or preview this year’s return / Include government and TurboTax worksheets.

What amounts are reported on lines 9, 18, 21, 22, 23, 24 and 25?

[DanP0428]

There is no tax break for short term capital gains.  It is taxed at your regular tax rate.  The lowest rate is on long term capital gains.

A Guide to the Capital Gains Tax Rate: Short-term vs. Long-term Capital Gains Taxes - TurboTax Tax T...