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How Cryptocurrency Investors Can Radically Reduce Their Taxes

 

According an article from CCN.com, some say it is un-American to pay tax to fund big government, but the majority of Americans will agree that spending more than you are due is certainly not part of their value system.  For those among us who agree, the word ‘loophole’ has a special sound to it.

ACT 22 of 2012 – To Promote the Relocation of Investors to Puerto Rico

One of these beautiful loopholes entitles taxpayers of Puerto Rico who qualify for Act 22 to pay 0% federal taxes on earned income and capital gains. 

 

Just Tell Me How To Qualify

First off, you have to spend at least 183 days per year on the island and suffer its hot sunny climate.  If you do, you will be eligible for bona fide residency to Puerto Rico. As long as you can pass a criminal background check, you are cleared to file your application with the IRS, which can be a bit costly and can range from $5,000 to $12,000.  And to show your bona fides you are, you are required to make a $5,000 annual donation to one of the approved Puerto Rico nonprofits and voila, no more income taxes for you!

More?

Puerto Rico is not only about summer holidays and a magnificent ocean.  It has become a real cutting-edge technology nerve center that is believed primed for the much anticipated next cryptocurrency bull-run. Today many members of the crypto-community live in Puerto Rico, and this is hugely beneficial for those who seek an entrance into the world of crypto.

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Who’s Who?

One of the most controversial members of the blockchain-community is Brock Pierce. According to Pierce as much as 1,000 members of the blockchain industry had located to the island.  According to Pierce, the blockchain community is making a difference on the island. They are partly responsible for stimulating the real-estate market by purchasing property and taking up rental space, and they spend a lot of money on food and leisure. Also, he contends, they are using their entrepreneurial flair to support and improve the ability of the Puerto Rican food system to withstand disruption when interruptions occur during disasters or crises. 

The Naysayers

Skeptics argue about the so-called trickle-down effect championed by Pierce.  According to them, stimulation and investment in the local economy have no value for the residents, and according to them, the IRS loophole is not achieving what it set out to do.  It is unsurprising that the government of Puerto Rico vehemently disagree with the naysayers. According to three government studies done over the last four years, it concluded that ACT 22 has a clear and present – and positive – impact on the local economy.

cryptocurrency tax

Tax Planning For Cryptocurrency U.S. Investors

The IRS Wants You!

Dealing with the IRS is never easy, and it can be a real nightmare if you own cryptocurrency.  If like most Americans at this point, you are not yet reporting your annual gains-and losses to the IRS you are moving on dangerous ground.  It is the consensus amongst professionals that you have to report.    With the exponential increase of online tracking tools and tutorials that educate traders on how to file their taxes, now might be the time to tackle this time-consuming task.  Sooner or later tax policies and enforcement will catch up with the blockchain industry/cryptocurrencies. There is no getting away from the IRS!

Yes You Can

Oh yes! Except there is.  If you pop over to Puerto Rico before the 2nd of July 2019, you can still qualify and clear your 2019 tax-bill.  Yes. Miracles happen every day in Puerto Rico.

Readers should note that this article is only intended to convey general information on these issues and that FAS CPA & Consultants (FAS) in no way intends for the contents of this article to be construed as accounting, business, financial, investment, legal, tax, or other professional advice or services.  This article cannot serve as a substitute for such professional services or advice.  Any decision or action that may affect the reader’s business should not rely solely on the contents of this article, but should rather be consulted on with a qualified professional adviser. FAS shall not be responsible for any loss sustained by any person who relies on this presentation.  This article is subject to change at any time and for any reason.

If you would like to benefit from our expertise in these areas, or if you have further questions on this advisory, don’t estimate to contact our specialists or call us 786 462 7899.

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Fulton Abraham Sanchez, CPA

Fulton Abraham Sánchez, CPA is a Certified Public Accountant, specialized In Tax Planning, International Business, Wealth Management and Offshore Banking. You can email him to fa@fascpaconsultants.com or follow us on Facebook : FAS CPA & Consultants.

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