As we discussed last week on our blog and on our podcast (episode 45), getting your initial principal out is crucial. How I am able to continuously do deals is by getting my initial principle out and recycling it into the next deal. I do this in real estate, cryptocurrency trading, and stock trading. I wanted to update everyone on what I found for tax implications on removing your money.
So, for cryptocurrency and stock trading, everything is based per coin or per share. So, if you buy 100 coins or shares for $10 a piece. Giving you an all in, investment of $1,000. Say the coin or share goes up to $20 a piece and you now have $2,000 in whatever you were invested in, with $1,000 being your own money and $1,000 in gains. Now, you may think or HOPE, you could pull your initial investment out and leave the gains in, to not realize a gain or make a taxable event. However, that is not the case. Since it is based on per coin or per share, you get taxed per share you sell. So, in order to get your initial investment of $1,000 back out, you would have to sell 50 coins or shares at $20 a piece. This would mean, you will get tax implications on all 50 coins or shares, which would result in gains of $500. You would then have to pay short term or long term gains on that $500. You will then have $500 initial out, $500 profit out, $500 initial in and $500 profit in.
This is definitely very sad because paying taxes is not fun, but it is the world we live in, in the USA. So, beware, if you pull your initial investment out of a deal through these avenues, you will have to pay taxes on your gains. This is not the end of the world. I would recommend accounting for the taxes and maybe having a higher target point for when you decide to withdraw your initial principal amount.
There is one trading platform for cryptocurrencies where these tax implications do not stand. As long as you stay an unverified trader. The requirement to qualify as an unverified trader is, daily withdrawal limits of up to 1 bitcoin. So, as long as you do not withdraw 1 bitcoin worth of money a day, then you will not have to have the tax implications of doing so. In order to stay unverified, you will not provide the website with your KYC information. KYC is Know Your Customer, it is a verification/identity document, that has your personal information, such as DOB, Social Security Number, and full name on. This allows them to track who is making or losing the money.
Kucoin also has passive income services, such as trading bots, money lending, and dividend payments. There are a lot of neat services on this app, that I recommend people use if they are interested in cryptocurrency trading.
I hope you got some value out of this and I hope you get your initial principal out of your investment 🙂
Happy Investing!
Your Life Tutor
-Shaun Tutor
Tutors of Life 