So you have been doing business with bitcoin for some time now. You have been mostly successful and now you have a certain amount that you have no idea what to do with. Or perhaps you have been thinking for years what it is like to get into the bitcoin game, but all the hesitation and unwillingness to make a move has cost you valuable time. Whatever the case may be, you are not alone in your struggle. Most investors have no idea how to cash out and actually use their bitcoin, let alone cash it out without paying any taxes on it.
This process is not that straightforward and easy as of yet, making it one of the barriers to bitcoin and other digital currencies being more dominant and prominent in the world of finances. Mining, purchasing, and trading with virtual currencies is all great, but how and when can you actually have some use from them? In this article, we are talking about the best ways and strategies related to cashing out bitcoins without having to pay taxes. If you are interested in furthering your knowledge about the leading cryptocurrency and is it smart to exchange it for traditional, real money, make sure to check out d-addicts.com.
1. Invest in Gold
Source: unsplash.com
In case you have the (mis)fortune of living in an area where cryptocurrencies require taxes, there could be ways to avoid this. First of all, you could invest them in gold, which is still among the best places to put down your money and let it passively grow over time. There is no taxation on gold so merchants dealing in precious metals have started to offer bitcoin investors a chance to swap their two minable treasures.
Swapping gold for bitcoin or vice versa is truly special, as one is the traditional precious way of becoming rich while the other is brand new. Best of all, you “mine” both of them in order to obtain them. It is also quite easy to buy gold with digital money like bitcoin, basically as easy as buying gold items or unrefined chunks with fiat currencies. If escaping without paying taxes on your BTC, use the golden (excuse the bad pun) opportunity and purchase some shiny yellowy goodness.
2. Retirement Accounts
If you are looking for the absolute easiest way of breaking down your BTC in order to escape the taxman, why not purchase your Individual Retirement Account (IRA) with it? Regular IRA’s allow the average investor to defer taxes on the gains until the start of distribution takes. However, ROTH IRA eligible people get money free of taxes. Still, there is a slight catch here, as always. ROTH IRA’s are only available to an employee who does not receive a 401(k) contribution from their employer. Self-employed people have a great chance to invest in bitcoin as a form of retirement fund. In the USA, an offshore bank account is needed onto which the IRA is to be moved. Furthermore, it should be with a limited liability company (LLC) and you have to set up an electronic (also known as digital) wallet where you will store the bitcoin (and potentially other cryptocurrencies if you are quite serious about them).
3. Life Insurance
Source: mccourier.com
Again with the help of offshore companies and their Offshore Private Placement Life Insurance, here is a way in which you do not get to enjoy the benefits of BTC within your lifetime. Since the biggest earners and business people do it, as well as hedge fund managers and those evading taxes, why shouldn’t you? Traditional LIP’s are taxed while offshore ones are not. The rest is pretty obvious. With them, you get a tax-efficient way of insuring yourself with no inheritance taxes involved. Like the previous choice on the list, there is a catch. All you need to achieve this is a light $1.5 million to set up an account. In some cases, this goes as high as $2.5 million. Therefore, you see, it is truly reserved for the richest of the rich, and unless you have a crazy amount of BTC in your e-wallet, this may prove impossible and futile to chase.
Offshore company formation like you can find at Wis-international.com has a number of advantages such as minimal taxation, preserving confidentiality, reduced administration obligations, protection of a company’s assets, and of course establishing an international business.
4. Move to Another Country
There are some great tax havens out there in the world, countries that are so rich that they do not tax their citizens. If you want to escape paying taxes on your bitcoin when turning it into real cash. If you have the means of doing this and making such a life-changing step, consider moving to a place like Monaco, Oman, UAE, Kuwait, The Bahamas, Brunei, Oman, or Bermuda. This does appear as an extreme solution, but there are people who could and would do it without a second thought. If you only want a country that does not tax cryptocurrency, consider Germany, Switzerland, Singapore, Denmark, Slovenia, Belarus, or Puerto Rico. There are some dream destinations among these 15 countries.
5. Drop Citizenship
Source: fortune.com
Last but not least, we have another seemingly extreme measure for something apparently insignificant in the long run as cashing out bitcoin without paying taxes. If there is no way to escape taxation in your country, you can give up your passport and became an expatriate somewhere else, in another country. Drastic, we know, and not that easy to do, but still a valid option that many people would seriously consider. Quite appropriate as the last suggestion we have for you, we are sure you will agree. To do this, you must first qualify for citizenship in another country that involves spending 7 years there, or perhaps marrying a native (for the papers). Admit it, paying taxes is easier than this elaborate long-term mission!
One More Possibility: Use your Bitcoin!
If you use bitcoin more, you will not have to cash it out and then spend regular money. More and more merchants and shops are accepting it, as well as its many cousins, as legitimate payment options. If you want an alternative to cashing out, spend bitcoin and you will not have anything to spend. Online shopping is the easiest, but payments through mobile apps that access your digital wallet are useful too.
