In this episode of the Fresh Fit Podcast, we bring in our accountant, Steve, to talk about taxes, crypto taxes, and much more. In this episode, we talk about how to prepare for tax season, what to have in place before the deadline, and how to make sure you have everything you need to report your crypto transactions on your tax return. We also talk about the benefits of investing in crypto and how you can leverage your crypto knowledge to make better decisions with your money and your assets. If you don't know who Steve is, then you're in for a treat! Steve is a CPA and has over 30 years of experience in the finance industry and is one of the few CPA's in the crypto space that does crypto taxes. He is also the author of the book "Onboarding Crypto" which is a book that teaches you how to learn to set up a crypto wallet and get on a DAX-based crypto wallet. It's a must-listen to learn how to get on board the crypto train. . We also discuss the importance of having a solid crypto knowledge base and how important it is to understand the fundamentals of crypto and understand the basics of crypto, so that you can make the leap into the world of crypto. We talk about what crypto is and how it can help you become a better trader and investor in the long term. and how crypto can be a game changer in the future of finance and financial services. I hope you enjoy this episode! - Don't forget to subscribe and share it with your friends! Timestamps: 1: 2:00 - Did you pay your taxes? 3:30 - How much money you earned in crypto? 4:15 - What crypto can you earn? 5:20 - What is a good crypto wallet? 6:40 - What are you looking for? 7:00 8:30 9:15 11:00 | What is your favorite crypto crypto coin? 12:30 | What's your favorite piece of advice? 13:15 | What are your favorite cryptocurrency? 14:00 // 15:00 + 15: How much do you want to invest in? 16: What do you think you would like to learn? 15:40 17:20 18:40 | How do you like your crypto crypto podcast? 19:20 | What s your best crypto crypto-Podcast?
00:03:50.000One in Miami, one in Los Angeles, and one in New York City.
00:03:54.000So I was up, I was with academics, we had like almost 40,000 people watching, and I was explaining, it was actually my old agency that I used to work for, HSI. I was explaining how search warrants work, my predictions, etc.
00:04:03.000So make sure to definitely go check that out on the playback, you'll have that up.
00:04:07.000But sorry for that delay, guys, because obviously this is like breaking news and shit, so.
00:05:04.000And I've owned several different businesses, invested in real estate.
00:05:08.000And I, you know, I deal with a whole slew of different industries in my practice as well as high net worth individuals and putting together some complicated tax strategies for them.
00:05:18.000And also, one of the only guys I know that does crypto taxes...
00:05:23.000I know that's one of the areas where a lot of the old-timers are not paying attention to it.
00:05:27.000They would call them traditional finance guys.
00:05:31.000As soon as it came out and I started taking courses in crypto, I said, okay, this is obviously the future of finance.
00:05:38.000The quicker I learned about it and the more I learned about it, the more valuable I will be and be relevant in the future.
00:05:45.000We'll talk a little bit about that stuff, too.
00:05:51.000Probably a high percentage of them are involved with crypto in some way, and they need to basically either report their transactions on their tax return.
00:06:00.000What percentage of accountants would you say are versed in crypto?
00:06:04.000Less than 10%, maybe like 5% at the most.
00:06:10.000There's a lot of, and this is what I did, I wrote a book, because when I first started taking crypto courses with Charlie and Miguel, I took their course, and now I teach in their course too now.
00:06:23.000So I've done several courses, and I did the tax portion of that for them.
00:06:27.000So I wrote a book because one of my things, when I went in there, it was so advanced, and they were talking so far advanced that it took me a while to catch up.
00:06:37.000So what I did was I said, okay, if I were to do this again, what would have been useful to me?
00:06:47.000From a tax perspective, but not only that, just learning the language of crypto and getting in and onboarding and understanding the fundamentals of it.
00:07:12.000And then learning what cryptos are good to invest in and basically looking at a project and not just like, right now we're in a, it's like the meme coin season right now.
00:07:23.000So they have this blockchain called Solana, you may or may not be aware of it, but everybody's like coming up with like the, you know, like Hunter Biden's laptop as a meme coin, you know, it has no use at all, but people go in and then, you know, these, they call them rug pulls basically.
00:07:37.000So it's like you try to get a sniper bot to get in on a position, carry that up to like, you know, stay in, stay in it for like 15 minutes, look at it and then try to cash out and make, you know, try to double your money.
00:07:46.000It's almost like gambling basically in my opinion.
00:08:04.000So you're one of the few accounts that basically, like, you learn crypto first.
00:08:08.000Once you understood it, you're like, okay, now I know how to apply this from a tax lens and how to properly deal with this.
00:08:14.000Because I think it's very important the audience understand that, like, knows that not only do you understand crypto, but most importantly, you know how to deal with it from a tax perspective.
00:08:22.000Because obviously, it's an asset class that is, I guess, far different than real estate or having a business or, I mean, you tell me.
00:08:39.000And if you're a miner, and you're mining, let's say, Bitcoin, or you're mining some other blockchain, like Pulse Chain or something like that, where you're setting up validator nodes, you're getting paid in rewards of that token, of that basically called the Layer 1 token.
00:08:58.000That's taxed as ordinary income, which is higher.
00:09:00.000So as you know, but a lot of the crypto stuff is going to be short-term gain, so it's going to be taxed more like an ordinary income because it's taxed higher, but most of the other, excuse me,
00:09:16.000less transactions Are going to be held for one year or more in crypto because the market's so volatile.
00:09:22.000So people come in, they trade quick and they're doing like swapping coins.
00:09:26.000And so the biggest mistake I see in crypto and the biggest misunderstanding is not understanding what's taxable, like a taxable event in crypto.
00:09:38.000You know, you take it from Bank of America, you go into Coinbase, you open up an account, you typically, most people, you know, get, like, U.S. dollar coin, which is a stable coin.
00:09:47.000It stays, it's pegged to the U.S. dollar.
00:09:50.000They'll get that, and then they'll flip it for Ethereum, get a MetaMask wallet, and then you need Ethereum to transact, because you have to pay transaction fees on the Ethereum networks.
00:10:16.000So if you buy Ethereum and then you're like, okay, and Ethereum, let's say it goes up and you go, I'm going to put this in like US dollar coin and USD, that's a taxable event because it's like a stock trade.
00:12:18.000So for anybody listening out there, hopefully you did that.
00:12:20.000If you didn't, And now you go and file your S Corp return, you're gonna get hit with a penalty from the IRS. So I'll talk, there's a little trick that you can do to get rid of that.
00:12:32.000So March 15th was for partnerships and for S Corps.
00:12:37.000April 15th is for personals, 1040 as you call them, and then for C Corporations.
00:12:43.000I don't have very many C Corporations, maybe like two.
00:12:46.000And then what you can do is you can file for an extension.
00:12:50.000An automatic extension for time to file.
00:12:54.000So here's another mistake people make.
00:12:56.000It's an extension of time to file, not to pay.
00:13:19.000You wind up owing $100,000, but then you go and you make an estimate on April 15th, and you pay that estimate, and you go on extension.
00:13:27.000When you go to file, if you pay $90,000 when you do your extension, and you go find out that you owe $100,000, then you're within that 90%, right?
00:13:39.000So the easy way I do it, as I take your prior year total tax, and another way is you could do 110% of that.
00:14:10.000So, I mean, if you got a lot of stuff going on and you don't have no interest in doing your own taxes, obviously, if you got too much going on, then you want to hire somebody.
00:14:16.000It's well worth your time to hire somebody that you can trust, that can, you know, obviously keep you out of trouble.
00:14:24.000I noticed when I switched from, you know, when I was working for the government, it was easy, right?
00:14:28.000You can go to an H&R block, standard, you know what I mean?
00:14:31.000You got one income, it is what it is, you got a regular job, cool, easy.
00:14:35.000But once you become an entrepreneur, you need to invest in an accountant.
00:14:38.000Yeah, so once you have a rental property or you're doing a side hustle, and then you have a W-2 on top of that, then you probably want somebody doing your taxes.
00:15:49.000It's a steep penalty from the IRS if you didn't do that, right?
00:15:52.000So a lot of people don't realize that.
00:15:54.000And they're like, oh, file an extension.
00:15:56.000You got like $2,500 because you didn't want to pay it for a year or some shit.
00:16:00.000Yeah, so the next year they go to file and all of a sudden they get a letter from the IRS saying they owe like $2,500 or $3,500 or something like that.
00:16:19.000So if you have a clean record that you didn't have any penalties for the previous three years and you're on time with your file, like you're up to date, like you filed your last three years' taxes, you don't owe anything, what you can do, it's called a first-time record.
00:17:00.000When you get the penalty, give it to me.
00:17:02.000And I have a template where I write a letter and then we just send it in.
00:17:06.000If you're a 1040 filer and you have penalties on your personal tax return, then get the penalty notice on the top there, the upper right-hand corner.
00:17:16.000Just get on the phone number and call them and say, hey, I want to do the FTA waiver.
00:17:21.000And then they'll see, they'll look up your account, and they're like, okay, you qualify, and they could abate it right on the phone for you.
00:17:29.000So that's a little free sauce for your guys there.
00:17:32.000Yeah, I mean, you already gave them a bunch of thousands of dollars right there.
00:17:35.000Bro, we've been going for just a few minutes here, and you've already given them a bunch of value as far as like, oh yeah, that counts as $10,000.
00:17:41.000Taxable event with crypto as far as swapping coins out.
00:17:44.000And then right now with people, because there's probably people watching right now that might have got one of these penalties, and they don't know that they can actually, if they have everything else to stand on.
00:18:13.000I know Steve just had some things he wanted to talk to y'all about, and then we're going to open it up for Q&A. So if you guys got questions, fnfsuperchat.com, or go ahead and send a Rumble rant in, and we'll answer your questions because some of you guys asked some really good questions.
00:18:23.000And guys, also just to add in as well, we have our own Telegram chat for announcements and events for pressure fit only because, as you know, when you get notified on YouTube or rumbles sometimes, you don't get it all the time right away.
00:18:43.000So I think that's kind of what I want to cover, just the basic stuff that some people are going to overlook that I think is going to be valuable for your audience.
00:18:49.000But the other thing I wanted to get into was the crypto tax, because that's the soup du jour today, right?
00:18:55.000Everybody's really like, the market's up, and we're in a bear market now.
00:18:58.000We just came off of a terrible long period where we were in the, excuse me, We're in a bull market.
00:19:04.000We were in a bear market for quite a while.
00:19:07.000So I'm sure a lot of the returns that people are doing right now in calculating their crypto transactions are going to come out to have losses.
00:19:15.000So I don't know if a lot of people knew this, but this is another piece of really good, valuable information is And it's different.
00:19:23.000When you're involved with a traditional finance stock market, and you're trading stocks, and you have stocks that are at a loss, a lot of people, what they were doing at the end of the year, like around close to December 31st, they were selling that stock for a loss,
00:19:39.000and then they would buy it back in the following year, thinking that it might go up again.
00:22:21.000Don't quote me on that, but there's a task force at the IRS where they're actually employing people to do on-chain analysis, where they're using tools and they're tracking big wallets, little wallets, and they're just data collecting.
00:22:38.000Most people, probably over 80% of people, are not filing anything on their crypto.
00:22:44.000So there's this thing called, like, unless you're going in some route where you're using maybe a VPN and using some different type of exchange, like maybe KuCoin or something, they don't request your personal information.
00:22:57.000That's called KYC. It's called, like, Know Your Client.
00:23:00.000So these are the data points that they need to know in finance, like, who is this person, right?
00:23:59.000It doesn't serve them to take a criminal track to it.
00:24:04.000Yeah, I mean, I've worked with IRS agents before, man.
00:24:06.000Like, they're really not looking to arrest people unless it's like egregious.
00:24:10.000Nine out of ten times when IRS criminal investigations is after you, you did some other crimes on top of the money crimes, which is why they're not coming after you because you got that money illicitly in the first place.
00:24:20.000But if you're, you know, making a mistake or you didn't know how to label something or whatever it may be, typically it doesn't rise to the level where they're going to come after you criminally.
00:24:27.000It's just like they'd rather get money from you.
00:24:52.000How big is it, you know, because we're talking about that we're like, what, like, maybe three trillion?
00:24:57.000I think once it gets, you know, the entire market cap of all crypto, right, we talk about that, it's like probably the size of like, It's a little bit bigger than Apple, right?
00:25:58.000So that's other than the foreign bank account.
00:26:00.000So how would you even properly estimate So you don't.
00:26:02.000So what you do is you get a software program like CoinLedger, right?
00:26:07.000CoinLedger pulls in, you plug in, you connect your wallets in there, and it can go on and it can pull all the decks, like the decentralized exchange information, all your trades.
00:26:17.000It does a pretty decent job of doing that.
00:26:20.000And it'll scour the blockchain, whether it's Ethereum or, you know, whether it's Solana, and it'll pull all the information and figure out what trades that you did, or swaps, or maybe you got airdrops that you claimed, or maybe you have,
00:26:35.000like, you did some, like, yield farming where you're getting, like, you know, you're, like, staking your crypto and you're getting, like, interest, basically, on it, more coins.
00:26:54.000It just pulls everything together in a nice report saying, okay, we saw you took this coin, like Ethereum, and you swapped it for USDC. You bought Ethereum at $1,500, but when you swapped it to USDC, it was at $3,000.
00:27:36.000That's all it is, and it's got all the transactions in there, so it knows based on your address and your wallet and the cryptos that you had, they have specific addresses, it knows how to calculate that.
00:27:46.000Now the only problem with when you're pulling all of this data off, you have to analyze the report it prints out, and it'll kind of flag, like CoinLedger's pretty good, it'll flag and say, hey, by the way, we see that you got one side of the transaction here, but you don't have any cost basis on the other side, so you need to look at that deeper.
00:28:03.000So maybe they transfer some crypto over from another wallet.
00:28:07.000And it started with like a zero basis or something like that.
00:30:23.000So what happened was like back in, I can't even remember, maybe like 20 years ago, there was a lot of like contractors that were working for construction, like developers and stuff like that.
00:30:33.000And a lot of them like didn't, they were like on 1099 basis or whatever, you know, so they would just not issue 1099s.
00:30:41.000So it was becoming a big issue because we had like a real estate boom.
00:30:45.000And with the IRS, it was put together a forgiveness program saying, hey, file all the 1099s, come, and then they weren't going to kill you on all these penalties and interest.
00:30:55.000And it was like a coming to Jesus, like, okay, here's your one chance.
00:30:59.000It's going to be like a forgiveness program where people came forward, they would pay whatever they probably were supposed to owe, and then they get caught up and then...
00:31:10.000Promise to stay in compliance in the future.
00:31:12.000So I think there's going to be something like that because, I mean, the underreporting is, it's crazy.
00:31:18.000Like, I think, like, it's probably less than 10% of people, probably, honestly, that are involved with crypto that are actually reporting on their tax return.
00:31:28.000I would probably estimate it's like that, yeah.
00:31:58.000And then I think there was only maybe 800 people in the entire United States, and we knew thousands and millions of people were involved with the crypto at that point in time.
00:32:12.000And then also the general mindset of people that are involved with crypto, Are kind of those that are like, I wouldn't say anti-government, but like anti-establishment.
00:32:26.000So that kind of like, it's like, there's a way to do it.
00:32:30.000You can make money, you can make a lot of money on it, you can do it right, and you can sleep at night and not worry about.
00:32:36.000If you think for a second that the IRS is stupid and it's not going to come after you, it's not going to find out, like...
00:32:41.000Once you get big sums of money and you're moving whale amounts, you're in the millions, then I don't know if it makes sense to stay off the grid and not report it.
00:32:54.000I'm not worried, but let's say I was a Nigerian scammer.
00:32:58.000Let's just say I got the tip that I was looking towards my crypto now on the forums.
00:33:05.000If I move to Puerto Rico, if I move to maybe Bali, will they come after me then?
00:33:10.000Because, I mean, I'm going out of the country.
00:33:51.000All of those that you have made on the mainland are subject to the U.S. Internal Revenue Service taxing.
00:33:58.000It's not until you get there and you get an attorney and then you actually sign all the paperwork and then you identify your public addresses for your wallets, then you start there.
00:34:10.000So all that stuff that came prior is subject to the United States mainland.
00:34:15.000Nice thing about that, if you do a full-time residency in Puerto Rico, you don't have to give up your U.S. citizenship, which is good.
00:34:22.000You can't vote in the federal election.
00:34:24.000But you don't, if you don't have any sources of income or anything outside of the U.S., outside of Puerto Rico, excuse me, then you don't even have to file a U.S. income tax return.
00:35:39.000We got DZA says, he goes, hi FNF, quick advice, I'm 25 and I work two full-time jobs and just paid off my 18k car in two years and I have 8k saved up after and would like to have more free time from one of these full-time jobs to network more.
00:35:56.000Any advice on which move I should make now?
00:37:19.000Darfurgang says, Steve, my brother owns a commercial property.
00:37:23.000How can I reap the benefits or tax benefits using the property for my business without him necessarily giving up ownership to me?
00:37:33.000I mean, yeah, so the only thing you can do is rent the property from him and then take a tax deduction on your tax return for the rent if it's legitimate.
00:37:51.000That's about it, yeah, because if he doesn't want to relinquish ownership to you, then you're not going to be able to take any depreciation on it.
00:38:44.000I mean, you don't even have to do that.
00:38:46.000There's a lot of CPA firms that'll take you and, you know, you could just do like, you know, like run to the post office, answer the phones or just do like just very basic stuff, fill out organizers or things of that nature where you can get your foot in the door.
00:39:00.000They're always looking for people to help out in the office because we're busy.
00:39:03.000Water Dragon says, question, what is the time limit to go from, this is a good question, sole proprietor to LLC and same from LLC to S-Corp?
00:39:15.000If you go to my bio in my Instagram, I got the A to Z LLC to S-Corp and it walks you through step-by-step with videos in there and everything on how to do that.
00:39:27.000If any of you guys are watching this podcast right now and you're an S-Corp, You're a sole proprietor, you're an LLC, you're fucking up.
00:39:34.000You need to switch over and become an S-Corp immediately.
00:39:37.000The only time it should even be an LLC, correct me if I'm wrong, is if it's a real estate property, right?
00:39:42.000Yeah, because we talk about it all the time.
00:39:44.000Because you're going to wind up filling out, it's called the Schedule C of your 1040, that's the most audited form in the IRS. It's the number one audited form.
00:39:51.000And also you're going to be winding up to pay whatever profit you...
00:39:56.000Declare on that on that Schedule C is going to be subject to 15.3% self-employment tax.
00:40:02.000Then you got to pay ordinary income tax on it.
00:40:32.000Once you hit your net, your net profit, once you take your income, take all your expenses out, if your net is around $40,000 to $50,000, then you should be an S-Corporation.
00:42:12.000I got a couple guys that's like, look, in my group, they're like, if you guys can learn this and master this, you will be like, this is, you know, the firms are going to be looking for people like you.
00:42:21.000Until the software and the interfaces become more integrated and, you know, maybe there's like an over layer of like, you know, like they're trying to come out with a couple of these, they call them like interoperable, like they can layer on all the chains and bring all the data in.
00:43:30.000Would you say, I mean, obviously this is the first year they're rolling it out, so there's always going to be kinks or whatever, but would you say within the next five to ten years, if people don't appropriately, I guess, declare their crypto for tax purposes, they're pretty much going to be in a situation where the IRS will be in a position to come after you?
00:43:48.000Yeah, so what they did with Coinbase, there was a case where they could just go in and basically, it's called a John Doe, they'd send a John Doe letter.
00:43:55.000So what the IRS was doing was, what Coinbase viewed it as, was like a fishing expedition.
00:44:01.000So they were trying to send out, like, oh, give us the name of all the people that are on your exchange.
00:44:07.000Because they wanted to see if they were looking at their 1040 to see, oh, are you reporting?
00:45:31.000The Mixer wallet is a very useful tool to have in crypto because there needs to be a way for business-to-business, B2B transactions, or let's say at some point you're going to start paying your employees in crypto.
00:45:43.000You need a way in order to pay those employees where people can't track it on chain.
00:45:49.000And figure out how much you're getting paid and how much he's getting paid and how much I'm not getting paid.
00:46:36.000So on there, on that form, you're going to have, you know, boxes and telling you where you got to put it.
00:46:41.000So, you know, there's going to be like regular rental income, you could have interest, you could have dividends.
00:46:47.000So wherever you could align those two on your tax return, so wherever interest goes, you're going to put that amount there as interest.
00:46:55.000And wherever dividends goes, you're going to put that amount there as dividends.
00:46:58.000If you have a capital gain, Things of that nature.
00:47:00.000So you're going to see those boxes on your K1. If you don't have the actual input screen on that software, it sounds like probably a rinky-dink software that only handles a W2 maybe at the most or something like that.
00:47:13.000So you might have to upgrade your software to have a data entry that handles the K1. Gotcha.
00:47:22.000Trigger Don goes, if I have a MetaMask wallet and receive payments in crypto, ETH, or BNB, is that subject to tax?
00:47:47.000Then you have to deal with, if that goes up, So let's say, you know, I drop you some Bitcoin, and it's at 65,000 a coin, and then it goes up to 70,000, you know, you're hanging on to it.
00:47:59.000So now you got this, you received the rental income, right?
00:48:03.000But then now it's at 70, now you have a cap gain of 5,000 on top of that.
00:48:07.000That doesn't happen with U.S. fiat, like, you know, currency when you get, you know, that just, they pay you and you put it in your Bank of America account because it's flat, right?
00:48:42.000So a lot of these Veeam coins and these people, you can have these wallets out there where you're getting all these airdrops of coins and stuff like that.
00:48:50.000If you don't go out and claim them, then they're not really yours.
00:48:53.000But if you go and, like, there's a process to claim these airdrops, and then once you claim these, then you have to recognize the value of that as receiving, like, income, whatever value that was at the time you got the airdrop or you claimed it.
00:52:37.000Yeah, so just go online, and you can do it right online.
00:52:40.000It's an automatic approval for that dollar amount, where you just set it up as an installment, figure out how much you want to pay per month, and just do an auto-debit on there.
00:52:54.000We got here, social, made 70k profit on social media this year, sent everything to my accountant, and you just, self-employment, ended up paying 20k taxes.
00:53:05.000Is there a way to save any of this next year?
00:55:17.000She says, with an S-Corp, how do you ensure you do anticipate how much taxes by year end?
00:55:22.000I have an accountant and paid quarterly taxes last year, but this year my taxes were surprisingly high due to a good year.
00:55:28.000How do I make work, I think it means, how do I make it work so it's not a surprise how much I owe on distributions?
00:55:34.000So you shouldn't owe anything on distributions.
00:55:36.000Again, this is kind of offboarding your crypto too, right?
00:55:38.000So you measure your taxable income based on the income you have, the expenses you're going to have support for in your return, and whatever that net profit is.
00:55:47.000That flows on your 1040 from your S Corp, and then you pay taxes on that.
00:55:52.000It doesn't matter if you keep all that money in your bank account, or you drain it all and you go on a shopping spree.
00:55:58.000You taking money out of your account is not a taxable event.
00:56:04.000And guys, these are chats from Castle Club, so if you want to be able to get involved in a show at a lower cost, it's $20 to join CastleClub.tv, man.
00:56:11.000You get your questions asked like this.
00:56:12.000So it does save you a bunch of money in the long run if you want to super chat.
00:56:15.000But it looks like her accountant set her up on...
00:56:17.000I don't know if this is a girl or not, but...
00:56:21.000But yeah, so what they do is like, and I do it for my clients, so it's based on what, like again, it's called like the safe harbor rule.
00:56:28.000They're going to set you up for, they'll take 110% of your prior year, cut it up to four for each quarter, and then you pay in your vouchers every three months on that.
00:57:01.000Yeah, because what happens is it's called nexus.
00:57:04.000So when you're physically going to that state, so let's say you're from Florida and you go up to New York and you're physically in that state, whether you're still being paid at a 1099, Technically, you have Nexus in there.
00:57:17.000But it depends on what they file, though.
00:57:20.000If the IRS doesn't go to the state jurisdiction when they do the 1099, then you probably can escape the filing requirement on there.
00:57:37.000Yeah, but you're really kind of like not registered.
00:57:39.000You just get the federal 1099 and nothing on the state side because it's not like a W-2 where they have to file New York State on the W-2.
00:57:46.000With the 1099, there's really no, like, I got to file a form with the 1099 New York, you know, jurisdiction, New York State Tech Department.
00:58:42.000If you onboard and you buy Ethereum and you haven't done anything with Ethereum, you didn't swap it for another coin, you didn't trade it, you're just sitting on it, you have what's called unrealized gain.
00:59:53.000If I didn't claim my crypto, should I claim it now?
00:59:57.000Oh, and gas prices, what he wants to know.
00:59:59.000Gas price is probably talking about the Ethereum gas price.
01:00:03.000Anytime you swap or do any transaction on any blockchain, whether it's Solana, whether it's the Bitcoin Lightning Network, or it's the Ethereum network, you have to pay A fee in the transaction of that layer one token.
01:00:19.000So in Ethereum, it's called, they call it GWAY. It's freaking weird.
01:00:22.000It's like these nerds that came up with this weird stuff.
01:00:26.000So they call it GWAY. So that's the Ethereum fractional.
01:00:30.000It's like you have a Bitcoin, it's caught up in Satoshis, right?
01:00:34.000So the Ethereum is caught up in GWAY. Gotcha.
01:00:45.000Also, how do I sell my crypto with little taxes?
01:00:49.000So if, okay, if I didn't claim my crypto, should I claim it now in?
01:00:53.000Yeah, so I mean, it depends on the dollar amount.
01:00:56.000You know, I would have to have no more information, you know.
01:00:58.000I would say if it's only a few hundred, if you're talking a couple few, like 10,000, 11,000, I would like that, you know, I'd have to look at the greater picture of all the other sources of income that you have so you don't get killed.
01:01:10.000But, you know, you could probably, like, it depends on the dollar amount.
01:01:14.000So that's a hard question to answer without any, like, specific numbers.
01:01:23.000If I were to take a profit in crypto and first apply the entirety of it towards my student loan and or my car loan, would I be able to write it off as a tax deduction?
01:02:15.000G Bargo's made a $300K last year as a W2 employee, opened an LLC, but still have to pay over $13K in taxes, and they take 35% down each month from my commission check.
01:02:31.000So I don't know if you're positioned to become a 1099 employee with that 300K. Probably sounds like you might not be able to do that.
01:02:41.000So if you purchase a property, you could take what's called depreciation and you could do a cost segregation study on your property and you could get a massive amount of depreciation in the first few years.
01:03:15.000It's hours, so you have to demonstrate and then you have to determine that you actively participate in it, that you're involved with managing and doing the leases and renting them out.
01:03:44.000But for that purpose, because getting designated as a real estate professional for tax purposes saves you so much money that it might be worth your time to get that real estate license.
01:05:34.000Yeah, but see what the IRS did, you used to be able to declare, like a lot of these guys, like you could have been even because they lose just as much as they win.
01:05:42.000And then at the end of the year, you tally everything up.
01:05:44.000And then you used to be able to deduct that right off of like the actual winnings.
01:05:49.000Now you have to go and put it on a itemized deduction as your losses.
01:05:54.000You put that on the itemized deduction.
01:05:56.000And the problem with that is you can't really hit the threshold to go over the standard deduction to be itemized.
01:06:05.000So it's almost like you just have to pick up the 1099 on the gambling winnings.
01:06:25.000When you get K1s, when you get W2s, when you get 1099s, they have your social security number, your name, your address, and that goes on your transcript.
01:06:37.000So if you don't file, like I have clients that haven't filed in 10 years, right?
01:06:40.000But what happens is the IRS says, alright, you don't want to file.
01:06:43.000They'll give you the minimum deduction, right?
01:06:46.000They'll put you as a single filer, give you the standard deduction, no expenses on there, and then they'll put all your income in, and if it comes out that you have taxable income and you owed, they'll wait.
01:06:55.000But they'll file what's called a substitute tax return on you, right?
01:06:59.000And then you get it, and it's gonna be plus penalties and interest, and it's gonna be big, right?
01:07:05.000So it's gonna be maybe three times of what you originally would've owed.
01:07:08.000Because they got the 1099s from these other entities that proved that they paid you.
01:07:52.000So the IRS came after the uncle after, like, 10 years and said, okay, what I was telling you, like, he had to go, and they gave him that forgiveness program, and they had to do all the 1099s, So Seth is in Sarasota now, and he gets all these 1099s, and then the IRS did all substitute tax returns on him,
01:08:10.000and he came out to, like, he owed, like, it was close to $200,000.
01:08:16.000Because he had made a couple M's doing the carpentry stuff.
01:08:19.000Yeah, so we went back, and I said, okay, let's figure it out.
01:09:45.000So I guess, dude, so like if you're getting 1099s, you better be filing your taxes because someone is reporting to the IRS that they paid you.
01:09:52.000And then if you don't go ahead and file a tax return that shows that income from that 1099, you look bad.
01:09:58.000That's what's going to happen with crypto.
01:09:59.000So crypto is going to have a 1099 reporting system with all this.
01:10:33.000Now that it's going back up, I want to take profit and buy property.
01:10:36.000What's the smartest way to do that things, guys?
01:10:38.000Yeah, so again, he's thinking it from like, okay, if I take money out and I off board, I'm going to have to pay taxes on it, right?
01:10:44.000So I don't know how, you know, you DCA'd and if you held your positions, and then when you, you know, like right now it's kind of late to do any tax planning in reference to that, so you're going to have to get hit with whatever that comes out when you do your calculations.
01:10:58.000There's not really much you can do, unfortunately.
01:11:02.000You kind of like already made the money.
01:11:05.000So you've got to set these things up prior to doing this stuff.
01:12:20.000So even if you put it in a qualified retirement plan, you're going to get hit with a 10% early withdrawal penalty on it, and then you're going to have to pay whatever taxes that's on there.
01:12:28.000So there's not really much you can do other than calculate whatever amount you're going to have on the capital gains.
01:14:11.000So I guess he had his trucking business.
01:14:13.000He bought a rental home, fixed it up for $150K, and then he also bought a Bitcoin machine for $27.5K. My accountant said that those aren't tax deductible?
01:16:19.000There's not much you can do other than like put money away for retirement.
01:16:22.000And you have to do like either 401k or a traditional IRA. You can't even do a Roth because Roth's not tax deductible.
01:16:29.000That's what sucks about being a W-2 employee, guys.
01:16:32.000This is why you don't really need an accountant when you're a regular employee and you don't have a side hustle or whatever because it's very standard.
01:17:16.000And just so the audience understands, if it's collections debt, the way I'm understanding it and the way that you wrote it, that means that you owed money to a party.
01:17:23.000That party couldn't get that money from you.
01:19:22.000Last one here from Ken Rose says, So, just to confirm, if I take profit in crypto, I should just pay the amount owed in taxes first, unless there are options to defer, and then cover my debts, school loans, car loans, etc.
01:20:40.000I mean, this time of year, the next couple of weeks, I might not respond right away, obviously, but I will eventually get back to you on the DM. So I love that you guys put questions in there.
01:21:03.000Once I start getting busy, I love doing those because it's a face-to-face Zoom, and then within an hour, we even go outside of the scope of just taxes.
01:21:10.000Sometimes I just give them some good financial advice, some good business advice.
01:22:02.000I'm teaching the very basic one-on-one for people that don't know anything about crypto and want to get involved with it, how to do it the right way, how to learn about it, how to get onboarded, just kind of like the baby steps, and then to get them to the junior high school or the high school level where you pass them off to the crypto mindset guys.
01:23:18.000You're an entrepreneur, you're starting to side hustle, whatever it may be, you need Steve on your side, guys.
01:23:22.000It literally saved me probably millions of dollars at this point.
01:23:26.000Yeah, it's been just so much fun seeing you guys, where you guys started and this whole story and how you guys, I'm proud of you guys, man.
01:23:37.000We're happy to have you by the side, bro.
01:23:40.000Guys, and also if you're like a W-2 employee, he helps you too.
01:23:44.000When I was a federal agent, you did my taxes.
01:23:46.000And I was starting my business on the side.
01:23:48.000So if you're like a guy that has a regular job and you're doing a side hustle, Steve is also fantastic to have to help you out with that as well.
01:23:55.000So now we're going to talk about P. Diddy?