“I can’t pay my crypto tax gains.”
The attempt to get your head wrapped around the crypto tax laws can be a headache. There are so many new tax laws than even a few years ago on capital gains, now specifically based around crypto.
So you have made a bunch of crypto profit and now tax time has rolled around and Uncle Sam wants their money. The problem is you do not have it and it is tied up in crypto. So now what are my options
Sell some crypto if you have it
This may seem counter productive but it is what many people are doing. If they do not have the money to cover their taxes, they sell of crypto assets to cover taxes. Better to be safe and pay taxes then worry later.
Extensions and payments
You always have the option to file an extension. This is usually your best bet as it gives you an extra six months to iron out the situation and get your papers in order. Remember this allows you to file later but you still have to make payments otherwise you will get penalties and interest tacked on.
You can usually get an installment agreement with no questions asked for up to 72 months if need be. Usually this goes up to $50,000 and is not a smart move but can get out of hot water if you need it.
Businesses can typically get $25,000 or less. If you are looking at more than this, then you will have to more than likely file some papers with the IRS and get approval.
Just pay them
We recommend you just pay your taxes on time. This is the easiest and safest method. There are some advantages of tax financing you can gamble on but it can be risky. Keep in mind that if you take the gamble and the market crashes further you will be in worse shape.