How many trades make me a trader for tax?
There is no count that settles it. The question is decided on the pattern of the activity as a whole, and frequency is only one of the factors: holding period, whether the positions were financed, how much time you actually devoted to it and the intention you can show at the time all weigh as well. That is why two people with the same number of trades can land in different places. It also means the analysis is evidential rather than arithmetic. What you can show about how you operated matters more than any threshold you might hope to stay under.
Can I deduct my crypto losses against other income?
That is one of the practical consequences of the characterisation, and it is why the question is better settled before a bad year than during one. Business treatment brings gains into income in full and allows losses and expenses to be deducted. Investment treatment brings capital treatment on the gains and restricts what can be done with losses. The same disposals therefore produce very different outcomes. And you cannot pick the regime that suits the year: the facts decide it, and the facts in a loss year are the same ones that applied while things were going well.
Does calling myself a long-term investor settle the question?
No. A stated intention counts for something, but it is weighed against what you actually did, and the pattern of activity decides the matter rather than the label you apply to it. If the holdings turned over quickly, were financed, and absorbed a substantial part of your working week, the description will not hold. The useful form of intention is contemporaneous and specific: a note of why a position was taken when it was taken, consistent with how it was then handled. Written afterwards to fit a conclusion you want, it carries very little weight.
Does borrowing to buy crypto affect the tax treatment?
Financing is one of the factors, so yes, it forms part of the picture. Positions funded with borrowed money tend to point towards a trading operation rather than the accumulation of an investment, particularly where the borrowing is short term and matched to the trades. It is not decisive on its own. A single loan taken against a long-held position sits very differently from a facility drawn and repaid around trades. Whatever the pattern, document it while it is fresh: how the funding worked, what it paid for and over what period is hard to demonstrate years later.
Can some of my holdings be capital and others business?
In principle the analysis follows the activity, so a genuinely separate long-term holding and an actively traded account can be characterised differently. What makes that work is separation you can demonstrate: distinct accounts, distinct addresses, a handling pattern that matches the treatment claimed, and a record made at the time rather than a division drawn later. Where coins move freely between the two, the claim tends not to survive examination, because nothing shows which pool a given disposal came out of. Decide the structure first, then operate it consistently.
Does using an automated trading strategy make it a business?
Automation cuts both ways and is not an answer in itself. A script that executes many transactions raises frequency sharply, which points one way; it can also reduce the time you personally devote to the activity, which points the other. What tends to matter more is everything around it: how the strategy was designed and monitored, whether it was funded with borrowed money, how quickly positions turned over, and what the whole arrangement was set up to achieve. Describe the operation honestly and apply the factors to that description, rather than looking for a rule about the tool.
Do American citizens living abroad have to pay taxes?
American expats and green card holders need to file US returns for life, and many of them pay little or no US tax once the relief is applied — but the filing is what unlocks the relief, so the two questions have different answers. The exclusion for foreign earned income, the credit for foreign tax already paid and the treaty between the two countries between them usually leave the total at roughly the higher of the two countries' tax rather than the sum. Skip the return and none of it applies. See Americans abroad.
What happens if the two countries disagree about which of them can tax me?
The treaty has a procedure for exactly that. You apply to the competent authority in your residence country, which takes the case up with its counterpart, and the two negotiate a position that removes the double taxation. Some treaties add binding arbitration if they cannot agree. It is slow and it runs on documents, so the practical work is preserving the record and filing protective claims while the clock runs. See our treaty work.
