Trying to lower your tax burden? Bitcoin mining might be your ultimate solution

Bitcoin and taxes.

Two topics you hear a lot in financial circles, but are rarely discussed together.

In fact, the two are often thought to be on polar opposites of the spectrum. Bitcoin has long had the reputation of a fringe phenomenon outside the mainstream. That mainstream happens to include taxes and the Internal Revenue Service (IRS). 

For Bitcoin holders and traders, however, it is a pertinent issue in their dealings. How does one own and trade Bitcoin without attracting the attention of the IRS for the wrong reasons?

Did you know that there are laws that specifically govern Bitcoin taxation?  

Better yet, did you know that you can actually use Bitcoin mining to reduce your taxable income?

The latter is obviously a bold statement. Everyone hates taxes. Even those who appreciate all manner of government services would probably opt to pay lower taxes if the decision were up to them.

The legal issues pertaining to Bitcoin ownership makes for an interesting case study. Some countries have even criminalized Bitcoin completely. Luckily, the United States, Canada, and most major countries in the world don’t fall into this category.

America’s tax agency, the IRS, has designated Bitcoin as property. This designation is not surprising as no other country has recognized Bitcoin as a currency because Bitcoin owes no allegiance to a sovereign. Bitcoin mining is, therefore, a business that can attract certain obligations and reliefs from the IRS.

On to the juicier bit now. Can Bitcoin mining actually help an American taxpayer lower their tax obligations?

Have you ever wondered why the rich keep getting richer? Yes, there is the obvious bit where most of them are successful entrepreneurs, innovators, or simply lucky. But the other true bit is that just like the criminal justice system; being rich helps many people navigate the tax landscape better than ordinary folk.

A lot of it involves utilizing existing tax loopholes and rebates to keep much more of what they earn.  As unfair as this seems, it is mostly perfectly legal. Being able to hire a great tax lawyer obviously goes a long way.

Why can’t the average person utilize such rebates in a tax code that is supposedly uniform for everyone? The answer is relatively simple. Most people aren’t aware that they even exist!

An average taxpayer will pay their taxes simply because they don’t want to get in trouble.

Therefore, anyone who knows how the tax system works can also reduce their tax burden significantly.

Yes, you read that right. By understanding Bitcoin taxable events, deductions available to a bitcoin business, and tax-loss harvesting, anyone can do exactly what the rich do, which is largely cut on their tax obligations. You don’t have to complain about how the rich always get away with all manner of things when the laws they utilize are applicable to everyone.

Opportunities to lower your tax burden are available. Unfortunately, many people are not aware of them. Instead of complaining all the time that you don’t have a chance to sit at the big table, how about creating your own table?