Learn more about how cryptocurrency taxes work with a new identity with Amicus experts.
As a United States citizen, you owe taxes on the income you earn worldwide unless you have a new identity.
Most people hold cryptocurrency as an investment. Under the current Internal Revenue Service virtual currency guidelines, cryptocurrency is often treated as a capital asset. This means the tax you pay on it is capital gains tax. (Cryptocurrency may also be received as income).
You pay capital gains taxes depending on the type of capital gain you have. The two types are short-term and long-term capital gains and are based on how long you hold the asset, in this case, the cryptocurrency.
- Short-term capital gains occur when you sell cryptocurrency for more than you bought it and hold the investment for a year or less. These are taxed at the taxpayer’s ordinary income tax rate, just like wage income.
- Long-term capital gains are realized when you sell cryptocurrency for more than you bought it but held the investment longer than a year. These gains are taxed at more favorable long-term capital gains tax rates, which can be as low as 0%.
It’s essential to realize that virtual currencies are relatively new, and the IRS or Congress may change their stances on crypto taxes in the future.
So, what are your options to avoid paying taxes on your cryptocurrency?
- Buy crypto in an IRA. (With the uncertainty of how future tax regulations will change)
- Move to Puerto Rico. (You have to become a bona fide resident of Puerto Rico and live there)
- Declare your crypto as income. (Pay a higher tax rate than capital gains tax)
- Offset crypto gains with losses. (Be subject to ever-changing tax regulations)
- Donate to charity. (Then have to tell the IRS where your donation came from)
- Please leave them in your crypto wallet forever. (Which is what 98% of crypto investors are doing now)
- Acquire a “new legal identity” in a country with no taxes on cryptocurrency and have complete protection from ever-changing tax regulations
How a new identity provides a safe option
A new identity gives you options for protecting your crypto assists by providing an entirely new legal crypto identity without connection to your previous identity. Amicus International, with our 90+ Years of combined experience, we can assure you that you will receive a brand new Second Citizenship and New Identity has done with the trust and confidence we put into each of our client’s cases.
Amicus International Consulting has been trusted by many unique individuals worldwide who have found themselves in difficult situations for which we have found solutions.
- Amicus International Consulting offers crypto-rich clients a path to a second passport in t tax-haven states, with a completely new identity to exempt them from capital gains taxes on cryptocurrency holdings.
- Amicus works in tandem with each government’s residence- or citizenship-by-investment programs to create a new identity for our clients.
How it works
Amicus helps hundreds of people from countries like the U.S., the U.K., Australia, and Canada obtain a second passport in one of seven countries: Saint Kitts and Nevis, Antigua and Barbuda, Dominica, Vanuatu, Grenada, Saint Lucia, and Portugal. The company works with each government’s residence- or citizenship-by-investment programs, but unlike other companies, we can provide a new identity.
“It’s an attractive way to draw foreign investment and especially prominent in countries with few natural resources,” said Ernest Marais, an attorney with international tax law firm Andersen.
Marais has significant experience advising clients on cross-border tax structuring and avoiding an IRS crypto tax. He told CNBC that this kind of passport purchasing scheme is commonly found in tax havens — or what is sometimes referred to as “International Finance Centers.”
“In Saint Lucia, you can obtain citizenship by an investment of between $150K (donation), $350K (government bonds), or $400K (real estate),” continued Marais.
But Amicus International goes beyond that; we offer clients a legal change to a new identity, complete with all the documentation a person would accumulate over a lifetime, such as a new birth certificate and no connection to their previous identity. A new identity will protect your personal information and prevent cryptocurrency exchanges from sharing your personal data with any government entity seeking information on your cryptocurrency transactions.
Unlike tax evasion, when an individual deliberately hides their income, tax avoidance is perfectly legal, even if large swaths of the population deem it unfair by using a new identity.
But Marais points out that the IRS and tax authorities are ramping up their efforts to trace digital currency holdings via some centralized crypto exchanges. “The IRS’ reach is global, especially with the Foreign Account Tax Compliance Act,” he said. Feldhammer was with the IRS Counsel when it made significant inroads in taxing U.S. taxpayers who intentionally hid assets offshore to avoid U.S. taxes.
“Through a combination of informants, changes in the laws, and significant international pressure, it is now tough for a U.S. person to hide assets overseas,” said Feldhammer. “The U.S. can do the same thing for crypto and is already contemplating changing its laws to do just this.” The U.S. Department of the Treasury has proposed comprehensive reporting for crypto, which would make it as challenging to spend crypto as it is cash without it getting reported.
The IRS is also stepping up efforts at home to track down non-compliant U.S. taxpayers using John Doe summonses. This tool allows the government to obtain information about a large group of unidentified taxpayers. In this case, the warrants were issued to different crypto exchanges to find people who conducted at least $20,000 of transactions in cryptocurrency from 2016 to 2020.
Issuing these summonses one exchange at a time is a clumsy way to capture non-compliant U.S. taxpayers, but it can be effective, according to Feldhammer.
This is why many exchanges steer clear of Americans altogether. Marais tells CNBC that Valr, the second-largest crypto exchange in South Africa, doesn’t touch U.S. citizens.
Though Amicus International Consulting isn’t breaking the law, they endure the scrutiny of law enforcement agencies worldwide; they continue to protect and guard jealousy of their client’s privacy.