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What is Bitcoin Tax-Loss Harvesting?

Bitcoin Tax-Loss Harvesting

What is Bitcoin Tax-Loss Harvesting?

If you go back to 2013, the market cap for bitcoin was a little over $1 billion. Later on, this number would explode more than 1000-fold to a value of more than $1.2 trillion! However, the market cap as of January 2023 is closer to $300 billion.These are the kinds of huge swings up and down that the world of cryptocurrency is famous for. These swings are also one of the reasons why so many people are interested in crypto tax-loss harvesting.

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Video: What is Bitcoin Tax-Loss Harvesting?

The bigger the dips in the market, the bigger the opportunity to enjoy huge benefits through this strategy for lowering your overall tax liability. So what is bitcoin tax-loss harvesting, and what are the benefits that it provides? Read on to learn all about this tax strategy and how it works!

What Is the Bitcoin Tax-Loss Harvesting Process?

Cryptocurrency gains are classified as capital gains. When someone’s investments increase in value, they will often need to pay some percentage of those gains as part of their tax liability. However, you can sometimes avoid paying some of these taxes if you suffer capital losses.

Capital losses occur when someone makes an investment that goes down in value instead of up. Of course, if someone’s investment goes down in value, there is no gain to be taxed. However, what happens if someone invests in two things at the same time and one goes up and the other goes down in value?

In this case, you can add the capital gains and losses together. If the overall losses are bigger, then it is not necessary to pay taxes even on the one investment that went up in value.

If the capital gains are larger, then it will be necessary to pay capital gains taxes on them. However, you will only pay taxes on the portion of the gains that exceed the magnitude of the capital losses.

In other words, the bigger your losses in one area, the more you can use them to offset your gains in another area.

For this reason, people sometimes make a point of incurring strategic capital losses so that they can offset their capital gains and pay fewer taxes. This is the essential bitcoin tax-loss harvesting strategy, one of the more powerful advanced strategies for investing in crypto.

Someone who has capital gains in another area can sell off their cryptocurrency at a losing price. That will offset their capital gains and decrease their tax liability.

Avoiding Negative Side Effects

In fact, if an investor is lucky, they can do all of this and then buy their recently sold investment back again. If the cryptocurrency price has not shifted, then this allows people to lower their tax liability without any real negative side effects from selling an investment at a loss.

When to Enjoy Bitcoin Tax-Loss Harvesting Benefits

Based on this understanding, one of the requirements for this strategy should be clear. There is no point in using this strategy if you do not have some capital gains to offset.

On top of that, if you already have capital losses equal to or greater than your capital gains, there is also no point in using this strategy. But if your capital gains exceed your capital losses, this might be the perfect opportunity for you to apply this strategy.

However, many people who use strategies like this use them at the end of the tax year. After all, if you wait until the tax year has ended to sell some of your investments at a loss, then you cannot use those capital losses to offset your capital gains from the previous tax year.

There is another situation in which it may make sense to employ this strategy. If there is a large dip in the value of cryptocurrency, then you can incur an unusually large loss by selling during that dip. Some people take advantage of market dips to incur larger capital losses.

What Is the Bitcoin Tax-Loss Harvesting Limit?

There is no limit to using this strategy to offset your capital gains. However, you may also be able to deduct as much as $3,000 each year from your regular income by incurring capital losses. Once you have hit that limit, there is no point in continuing this strategy for purposes of offsetting your income.

You may also want to keep in mind that if you have excess losses, you can carry them into the future to offset future capital gains and income. This is another reason why so many people prefer to incur capital losses during market dips.

If the tax year ends and you do not have any capital gains or income to offset, that does not mean that your capital losses are wasted. You can come back to them in the future to lower your tax liability.

The Bitcoin Tax Bill Timeline

This tax savings strategy may not always be available in the same way. Currently, you can sell an investment and then buy it right back again after decreasing your tax liability.

However, this is not legal when it comes to securities. Some people consider that this same law should apply to cryptocurrency. There is a decent chance that future lawmakers will agree.

Understand the Nuances of Bitcoin Tax-Loss Harvesting

Many people hear about Bitcoin tax-loss harvesting and assume that it is a complicated process. Although there is some truth to this, enjoying the benefits of this tax strategy can be much easier than some people might imagine. Depending on the situation, using this strategy can provide incredible value by lowering someone’s tax liability for years.

To learn more about how to take care of your financial health and future, reach out and get in touch with us here at any time!

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Cash Discount Processing: Everything to Know

Small business owner offering cash discount processing

Cash Discount Processing: Everything You Need to Know

Cash Discount Processing is the wave of the future. According to a Federal Reserve study, people use cash for approximately one in five transactions in the United States.

Some stores and businesses offer a cash discount program. These businesses take a certain percentage off the total purchase if customers pay with cash.

Any business owner considering a cash discount program probably has questions. You might wonder how these programs work, if they’re even legal, and how much you can save.

Read on to find out everything you need to know about using a cash discount processing system!

Video: Cash Discount Processing: Everything You Need to Know

Cash Discount Programs: An Overview

Cash discount programs are a way to offset the cost of credit card fees. Any business or individual who accepts credit cards can offer a cash discount.

Essentially, with this kind of program, customers paying with cash can save a percentage of the total price. When customers use a credit or debit card, they cover the cost of the transaction fee.

Your processor will give you a lower rate on processing fees if customers pay with cash. Some people prefer to pay with cash, and these customers are more likely to choose your business if you offer a cash discount.

Businesses that offer a cash discount can also use it to attract new customers. Not only can you use this program to save money on your transaction fees, but you can also generate more business.

How a Cash Discount Program Works

Many transactions use credit cards, especially with online sellers, but the fees can make businesses less profitable. Cash discount programs are a great way for businesses to encourage customers to pay with cash.

The simplest form of a cash discount program is something like, “If you pay with cash, you get 10% off your purchase.”

This type of program is useful for any business that accepts credit and debit cards, but some are better suited for them. Businesses with a product or service that rarely changes are good candidates for a cash discount program.

Examples of businesses that should consider cash discounts include:

  • Restaurants
  • Cafes
  • Service businesses (plumbing, HVAC, pest control, etc.)
  • Medical clinics
  • Automotive shops
  • Salons

Businesses with a more extensive inventory might have a harder time implementing a cash discount. Large retailers, for example, have a constantly changing inventory that makes it more difficult.

The reason certain businesses are better suited for cash discounts is because of how pricing works.

When you offer a cash discount, you include the cost of credit card processing in the advertised price. If a customer pays with cash, they pay a discounted price.

To cover the cost of card processing, businesses must alter their pricing structure. A business that moves a large volume of products will therefore have to work much harder changing their prices.

As a result, food vendors and businesses with a small selection of services are a better choice for this program.

Surcharges vs. Cash Discount Programs

Many business owners confuse cash discounts with surcharges. However, cash discounts and surcharges work in very different ways.

It’s important to understand the differences before you decide which one is right for your company. Cash discounts are easier and more common, and have fewer legal issues.

A surcharge is a fee added to the advertised price if a customer pays with a debit or credit card. With a cash discount, on the other hand, customers paying with a card pay the advertised price.

This makes cash discount programs more flexible merchant services overall. They can be implemented with minimal changes to your business model (and without any need for additional equipment).

Surcharges can also be difficult if they’re applied across multiple products or services. For example, products with varying amounts due at checkout can confuse and frustrate your customers.

Cash discounts also allow users more flexibility when planning out their purchases in advance. They also don’t require any change in customer behavior, such as making sure they know about all applicable fees.

With a cash discount, customers view your payment options as a chance at saving. With a surcharge, it seems more like a hidden fee.

Are These Types of Programs Legal?

When you offer different prices to customers based on their payment method, it can raise legal questions. Businesses may be hesitant to implement a cash discount because they aren’t sure if it’s entirely legal.

Businesses using a surcharge are more likely to run into legal issues. Although legal in most states, surcharges for credit cards have to be clearly displayed at the point of sale.

Some states have outright bans on surcharges for credit card transactions. Cash discount programs, however, are legal anywhere in the United States.

With a cash discount program, the vendor adjusts the price of each product or service to account for the cost of processing fees. When a customer pays cash, the vendor applies the discount at checkout.

Because the customer never pays more than the advertised price (except with regard to taxes), there are no legal issues.

Save on Credit Card Processing

A cash discount program is one of many tools available to help you save money and make your business more profitable. Unlike a surcharge, customers don’t pay an added fee when they pay with a credit card.

Instead, customers who use a card pay the advertised price, while cash-paying customers get a discount. Businesses can use their cash discount program for advertising while saving money on credit card processing.

First Financial offers merchant services with 24/7 customer support. If you need a way to accept credit cards, we can help, even if you’ve been turned down by traditional banks.

Contact us today to learn about our financial services!

7 Reasons to DCA Bitcoin – Dollar Cost Averaging

Bitcoin DCA- Dollar Cost Averaging

DCA Bitcoin: The Benefits of Dollar Cost Averaging Bitcoin

Understanding DCA as it relates to Bitcoin. There are certainly some flashy, eye-catching methods of investing in bitcoin. Unfortunately, they seldom offer the rewards they promise.

You may have experienced disappointment after disappointment with these techniques. Now you’re looking for something that doesn’t overstate its potential but delivers consistent, reliable results.

What you’re looking for is dollar cost averaging or DCA. When you DCA bitcoin, you gain valuable benefits both financially and otherwise.

We’ll share seven impressive reasons investors say they found what they were looking for in DCA. Bitcoin Savings Account: 5 Important Things to Know

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Video: DCA Bitcoin – The Benefits of Dollar Cost Averaging Bitcoin

What Is DCA Bitcoin?

DCA or dollar cost averaging is an incremental approach to investing regardless of market conditions. In its most basic form, it means purchasing bitcoin at regular intervals, such as weekly, on an ongoing basis. You can easily automate the process, so you don’t have to remember to make your next purchase.

Now let’s look at DCA’s potential benefits.

1. It Prevents You From Trying to Time the Market

Timing the market is tempting to most new investors. On the surface, it seems simple. You watch the market until prices dip significantly and buy. Next, wait until prices rise as high as they can and sell before prices start heading downward.

One of the many problems with trying to time the market is you have to be right when most other investors are wrong. That would be a challenge for even the most brilliant, well-educated investor.

You are also putting yourself in a position where you must be right not just once but twice. You have to correctly predict the bottom of the market as well as its top.

Conversely, you’re not worried about being “right” or “wrong” with DCA. You’re looking down the road.

So, how effective is the approach? Let’s look at what would have happened if you had purchased $20 of bitcoin weekly beginning on the first day of 2014 and continued until November 8, 2022.

According to a bitcoin DCA calculator, you would have converted a $9,220 investment into $160,877.02. That’s an increase of over 1,645%.

2. It Prevents Decision Fatigue

Decision fatigue is the mental state after a person is overwhelmed for an extended period with choices to make. You may have experienced this if you’ve ever had to plan a wedding or remodel a house. The decisions can seem fun initially but become increasingly burdensome as the process drags on.

That’s why you’ve heard the oft-repeated story of people in power, such as CEOs and even the President of the United States, limiting their daily wardrobe. In the mornings, they don’t face a multitude of choices for clothing. Those who have adopted this approach say that it saves them valuable mental energy.

Dollar cost averaging your bitcoin likewise saves your brain from the exertion of having to make daily buy and sell decisions. You only need to establish your investment amount and the frequency with which you’ll invest. That’s it. You’re done.

3. It Makes It Easier to Stick to a Budget

You may be a person who believes it’s not necessary to set up a budget. Perhaps, you never experience a financial shortfall at the end of the month. That’s great. But there are other reasons why a budget is still valuable.

A budget helps you set priorities. Without one, you might find other ways of spending your money. But if you use a budget, you will mentally set aside a certain amount to buy bitcoin.

This leaves you and your wallet free. You can concentrate on pastimes, hobbies, and other activities.

4. It Gives You Immunity to Hype

Any asset can be the subject of the great hype machine, but bitcoin is a favorite target. Try browsing bitcoin newsletters, blogs, and podcasts without being told you’re in danger of missing out on the next big thing.

No one’s surprised when a small child is distracted by shiny things, but we’re disappointed when supposedly mature people are. You can avoid disappointing yourself by using DCA.

You would no longer have to scrutinize each new offering for fear of missing out. Jumping from one investment strategy to another is a sure way of losing momentum. As the old saying goes, the person who chases two rabbits seldom catches either.

5. It Reduces Your Risk

Market volatility frightens newcomers and even some longtime investors. Why? There’s a dread of losing money if the market tanks shortly after you enter it.

That fear is understandable for a new investor looking for somewhere to put a small inheritance. You don’t want to wake up and learn that you lost 50% of your investment overnight.

On the other hand, using DCA to invest a reasonable percentage of income regularly reduces risk. How?

You know that you’re not reliant upon the results of a one-time investment. You’re in the market for the long term.

Therefore, if your assets take a hit, you’re sure of two things: 1. history tells you the setback is only temporary, and the market will rebound, and 2. now that prices are lower, you’re going to purchase more bitcoin at a bargain as part of your regular investment routine.

6. It Reduces the Likelihood of Obsession

One of the reasons bitcoin trading can be obsessive is its availability. There is no off time. The market is constantly changing, which is an enticement to someone whose brain is geared toward finding excitement and novelty.

Seeing what a traitor thinks are signs of a bull run can release dopamine, a brain drug of anticipation and reward. The sensation can train the brain to chase that high over and over. Progressively, the anticipation and the reward have to become greater. That usually means risking more money.

Like any addiction, bitcoin obsession can lead to financial ruin. More importantly, it can endanger families and other relationships. Even your physical health is involved.

DCA can reduce the likelihood of your heading down the path of addiction because it doesn’t matter what the market is doing at three in the morning, during your best friend’s wedding, or during your grandfather’s funeral service.

Your Investments are on a set schedule, leaving you free to focus on the more important moments of life.

7. It Gives You Time to Work on the Rest of Your Portfolio

Even the most hardcore bitcoin investor will likely have a well-rounded portfolio that includes other assets. However, spending all day every day concentrating on buying bitcoin leaves little room in your schedule for researching other investment opportunities.

DCA gives you that time back. Now you can delve into other avenues that require learning about promising assets with which you need to become more familiar.

Let Us Take Care of Your DCA Bitcoin

Are you interested in getting off the never-stopping treadmill of timing the market? If so, you can DCA bitcoin to find the same comfort and peace of mind it’s given other investors.

Contact us today for more information about how you can get started with dollar cost averaging.

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What Are Payday Loans?

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On average, adult Americans have between $11,200 to $57,800 in their savings accounts. That may sound like a lot, but 56% of Americans aren’t able to cover an unexpected $1,000 bill.

If you’ve had a huge expense come up and aren’t prepared for it, then you might be panicking. Where are you supposed to pull all that money out from anyway?

Personal loans might take too long to get. But did you know about payday loans?

What are payday loans? How can you use them, and what are the pros and cons that come with them? Read on to find out!

What Are Payday Loans?

Payday loans are also known as cash advance loans. As the name suggests, you’ll need to have a source of income to get this type of loan since your paycheck is used to repay the amount once your employer disburses the money.

These loans are considered a type of short-term loan since they’re usually repaid within a few weeks or a month (whenever your next paycheck is due). Whereas with a traditional personal loan, it can take years to repay in full. Because they’re short-term loans, payday loans also tend to have lower amounts.

Do note that not all states allow payday loans.

Woman Excited Looking at Payday Loan Offer

What Do You Need to Get Payday Loans?

Besides having a source of income, there aren’t a lot of requirements. You’ll need to be at least 18 years old, have an active bank account, current residence, and valid ID. Some lenders also require a minimum monthly income.

This means that if you have no or poor credit, you may be able to borrow money.

How Can You Use Payday Loans?

The beauty of payday loans is you can use them for anything you want. There are no restrictions, so whether you use the cash for groceries, rent, gas, or anything else, you won’t be limited.

Pros of Payday Loans

If you’ve got some loan choices available, then you might be wondering what the benefits of payday loans are. Here are some of the main pros.

You Can Apply in Person or Online

You can apply for payday loans at a brick-and-mortar lender. But if you don’t want to leave the comfort of your house, this is possible too.

There are lots of online lenders you can browse without wasting time or gas. And once you find one you like, you can apply for online payday loans right on your computer.

The Application Process Is Fast

The application isn’t long and complicated, so you don’t need to spend much time filling it out.

More importantly, it won’t take long for the lender to get back to you. In most cases, you’ll usually hear back faster than traditional loans.

With traditional loans, it can take several days to weeks for lenders to give you a decision.

You’ll Get Money Fast Too

Not only will you receive quick responsives from lenders, but you can also get the funds fast. If there’s an emergency, once you accept the loan offer from a lender, funds can be deposited in as little as 24 hours

This can ease your burden and stress, especially since traditional loans take a while for approval and disbursement.

There Are No Credit Checks

If you have bad credit or none at all, then you might already know how difficult it is to get approval for personal loans or lines of credit. It can feel impossible to secure much-needed funding.

What’s great is payday loans for bad credit are available. So long as you have a steady paycheck, it’s pretty easy to get.

You Can Roll Over Your Loan

If your next paycheck is smaller than expected and you can’t cover the entire loan amount, you may be able to roll over the loan. This means you just pay some fees and you can use your next paycheck to cover the rest of the payday loan.

Otherwise, repayment is a one-and-done situation. So there’s less stress when compared to monthly payments with a traditional loan.

Cons of Payday Loans

Payday loans certainly come with a number of benefits, but there are also drawbacks. Here are the main ones you should be aware of.

Interest Rates Are High

If you think credit card interest rates are high, then wait until you see the ones attached to payday loans.

Some states don’t have rate caps; for example, before one was introduced in Ohio, payday loan rates stood at 677%! In the state of California, the typical interest rate is 460%.

But if desperately need money and are certain you can immediately pay off the loan with your next paycheck, it can save you in a pinch.

Rollovers Can Add Up

While rollovers are handy when you can’t pay back your advance in full, they can quickly add up. In addition to the fees, you’ll need to pay the high interest amount, which will only grow the longer you extend repayment.

Are Payday Loans Right for You?

The answer to the question “what are payday loans” is they’re a quick and easy way to get fast cash when you’re in a bind. However, they’re not without their pros and cons, so make sure you carefully weigh them up before you get one.

If you do decide they’re right for you, then the next step is to take out a loan from a reputable company. We at First Financial are here to give you the options you need fast!

Ready to get started? Then apply for a payday loan now!

The Complete Guide to Choosing Auto Loan Providers: Everything to Know

The Complete Guide to Choosing Auto Loan Providers: Everything to Know

Doing research is important when choosing auto loan providers Unfortunately, there are over 6 million car accidents each year in the United States. Not all of these are minor, either. It’s not uncommon for people to deal with significant pain after auto accidents.

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The good news is that many of these accidents are preventable by exercising safe driving habits and using a reliable vehicle. More often than not, buyers find themselves applying for auto loans so they can afford the car that’s right for them.

Choosing auto loan providers, though, isn’t always as easy as it seems. We’ve put together a brief guide that details how you can narrow down your potential loan provider options.

Let’s dive in.

Check Out Their Online Reviews

You’ll want to make sure that you’re reading online reviews as possible.

This includes scouring through the provider’s website, social media platforms, and any other independent review sites. You should also check out the Better Business Bureau’s (BBB) rating for the provider.

All of this research will give you a good idea of what other customers have experienced with the provider in terms of customer service, loan options, and repayment terms.

Look For Red Flags

When you’re reading through reviews, be sure to look out for any red flags that may pop up. These can include complaints about hidden fees, difficulty getting in touch with customer service, or a lack of transparency when it comes to the loan process.

If you see any of these red flags, you’ll want to move on to another provider.

Get Quotes From Multiple Providers

Don’t just settle on the first auto loan provider you come across.

Instead, take the time to get quotes from multiple providers. This will give you a better idea of who can offer you the best interest rates and repayment terms. Be sure to compare these offers side-by-side so you can make the best decision for your needs.

Read the Loan Terms and Conditions Carefully

Once you’ve chosen a loan provider, it’s essential that you read the loan terms and conditions carefully. This includes the interest rate, repayment schedule, and any fees or penalties that may be associated with the loan.

Unfortunately, many buyers neglect to do so when looking to secure financing. This can lead to a large number of complications in the future, such as being stuck in an agreement that you cannot comfortably manage.

Is It Possible to Get a Loan if I Have Bad Credit?

If you don’t have good credit, it may be difficult to get an auto loan from a traditional lender. However, there are still options available to you.

There are a number of subprime lenders that specialize in providing loans to buyers with bad credit. These lenders will typically offer higher interest rates and less favorable loan terms. However, they can still provide you with the financing you need to purchase a vehicle.

Keep this in mind if this situation applies to you.

What Is the Typical APR of an Auto Loan?

The typical APR of an auto loan will vary depending on a number of factors, such as your credit score, income, and the amount you’re looking to borrow. However, the average APR for an auto loan is around 4%.

If you have bad credit, you can expect to see an APR that’s closer to 10%. The good news is that you can likely refinance your loan in the future.

How Long Does It Take to Get Approved For an Auto Loan?

It typically takes around 24-48 hours to get approved for an auto loan. However, this timeline can vary depending on the lender you’re working with.

If you need financing quickly, be sure to communicate this to your lender so they can expedite the process. Oftentimes, buyers run the risk of missing out on purchasing the vehicle they want if they take too long to secure financing.

Can I Pre-Qualify For an Auto Loan?

Many lenders will allow you to pre-qualify for an auto loan. This means that they’ll give you an idea of how much you’re eligible to borrow based on your credit score and income.

Keep in mind, though, that pre-qualifying for a loan is not the same as being approved for a loan. Once you’ve found a vehicle you’re interested in, you’ll still need to go through the formal loan application process.

What Is the Average Term For an Auto Loan?

The average term for an auto loan is around 60 months. However, this timeline can vary depending on the lender you’re working with.

Some lenders may offer loans with terms as short as 24 months, while others may extend the term up to 84 months.

How Much Should My Down Payment Be?

The size of your down payment will vary depending on the amount you’re looking to borrow and the terms of your loan.

However, most lenders will require a down payment of at least 10%. If you have bad credit, you may be required to put down 20% or more. If you have stellar credit, you may be able to put down less than 10%.

Woman with key in hand choosing auto loan provides.

Choosing Auto Loan Providers Doesn’t Have to Be Complicated

Although choosing auto loan providers might seem difficult to understand at first, it’s much easier than people think. Ensure that you keep the above guidelines in mind when moving forward so you can avoid mistakes.

Looking for other info about how we can help you out in the future? Feel free to reach out to us today to learn more.


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