Duna DefAi

Tax Report

Here is your Comprehensive Crypto Tax Analysis and Savings Report based on the information you provided:

Executive Summary

  • Location: Indiana
  • Filing Status: Single
  • Income Data:
    • Short-Term Capital Gain: $360,683
    • Long-Term Capital Gain: $407,489
    • Federal Taxable Income: $468,062

You are subject to federal income tax, capital gains tax, and Indiana state tax, which would require careful planning to minimize your tax liability and optimize profits.

Step 1: Initial Tax Calculation

A. Federal Income Tax

The 2025 federal brackets for single filers apply:

  • $0 – $11,925: 10% = $1,192.50
  • $11,926 – $48,475: 12% = $4,375.80
  • $48,476 – $103,350: 22% = $12,060.28
  • $103,351 – $197,300: 24% = $22,564.80
  • $197,301 – $250,525: 32% = $17,059.68
  • $250,526 – $626,350 (remaining $217,536): 35% = $76,137.60

Federal Income Tax Liability = $133,390.66

B. Short-Term Capital Gains Tax (STCG)

STCG is taxed at ordinary income rates (same as federal income tax brackets). Adding $360,683 STCG to taxable income pushes your total income into the highest bracket (37% above $626,350).

STCG Tax Contribution:

  • $626,350 – $468,062 = $158,288 taxed at 37% = $58,566.56
  • Remaining $202,394 taxed at 35% = $70,837.90

Total STCG Tax = $129,404.46

C. Long-Term Capital Gains Tax (LTCG)

The LTCG rates (0%, 15%, 20%) apply based on taxable income.
Adding $407,489 LTCG to the income:

  • $0 – $47,025: 0% = $0
  • $47,026 – $518,900 ($407,489 fits here): 15% = $61,123.35

Total LTCG Tax = $61,123.35

D. Indiana State Tax

Indiana's flat income tax rate for 2025 is 3.15%. This applies to total income ($468,062) and gains ($360,683 + $407,489).

Total State Tax = 3.15% × ($468,062 + $360,683 + $407,489) = $38,698.36

Initial Total Tax Liability

  • Federal Income Tax: $133,390.66
  • Short-Term Gains Tax: $129,404.46
  • Long-Term Gains Tax: $61,123.35
  • State Tax: $38,698.36

Grand Total = $362,616.83
Profit After Tax = $1,236,234 – $362,616.83 = $873,617.17
Effective Tax Rate: ≈ 29.34%

Step 2: Key Strategies to Save Tax

  1. Harvest Crypto Losses
    Offset STCG and LTCG by selling underperforming assets at a loss (tax-loss harvesting). This can reduce taxable gains. Short-term losses offset short-term gains first, minimizing STCG (taxed higher).

  2. Invest in Opportunity Zones
    Reinvest gains into qualified opportunity zone funds to defer or even eliminate some capital gains tax.

  3. Charitable Donations

Donate appreciated crypto or cash to qualified 501(c)(3) charities. This will reduce your taxable income while avoiding capital gains on the donated assets.

  1. Optimize Cost Basis Method
    Use HIFO (Highest In, First Out) or Specific Identification to sell higher-cost crypto first, reducing taxable gains.

  2. Long-Term Holding
    Consider holding assets for over one year to qualify for the lower LTCG tax rate (15–20%).

Step 3: Revised Tax Calculation with Strategies

Let’s assume the following adjustments:

  1. $70,000 of crypto losses (tax-loss harvesting).
  2. $50,000 donation to a qualified charity.
  3. Utilize the HIFO method for asset disposition, reducing STCG.

Adjusted Taxable Income and Gains:

  • Revised Short-Term Gains: $360,683 – $70,000 = $290,683
  • Revised Long-Term Gains: $407,489
  • Charity Deduction: $50,000 reduces federal taxable income to $418,062.

A. Revised Federal Income Tax

Using $418,062 taxable income:

  • Recalculated based on updated brackets = $118,390.66

B. Revised STCG Tax

Adjusted STCG = $290,683

  • $626,350 – $418,062 = $208,288 taxed at 37% = $77,067.56
  • Remaining $82,395 taxed at 35% = $28,838.25

Revised Total STCG Tax = $105,905.81

C. Revised LTCG Tax

No change ($407,489 still taxed at the 15% long-term rate).

Revised LTCG Tax = $61,123.35

D. Revised State Tax

Indiana state tax = 3.15% of adjusted total taxable income
= 3.15% × ($418,062 + $290,683 + $407,489) = $34,987.53

Revised Total Tax Liability

  • Federal Income Tax: $118,390.66
  • Revised Short-Term Gains Tax: $105,905.81
  • Revised Long-Term Gains Tax: $61,123.35
  • Revised State Tax: $34,987.53

New Grand Total = $320,407.35
Profit After Tax = $1,236,234 – $320,407.35 = $915,826.65
Effective Tax Rate: ≈ 25.91%

Tax Savings = $362,616.83 – $320,407.35 = $42,209.48
Percentage Savings: ≈ 11.64%

Step 4: Action Plan for Further Tax Savings

  1. Invest in a Tax-Deferred Account (IRA/401(k)):
    Consider allocating future crypto or speculative investments into an IRA or 401(k), deferring taxes.

  2. Incorporate Loss-Carryovers
    Any unused losses from tax-loss harvesting this year can be carried over to offset future gains.

  3. Explore Crypto Gift Strategy

Gift up to $19,000 of crypto tax-free (2025 limit) to family or friends in lower tax brackets.

  1. Invest in Low-Tax or Tax-Free Opportunities
    Consider municipal bonds or Roth IRAs to minimize future tax obligations.

  2. Consider Moving to a Tax-Friendly State
    States like Florida or Texas do not impose income tax; relocating might save on the 3.15% Indiana state tax.

Final Notes

These recommendations are tailored to your high-income and high-gain scenario. For the best outcomes, consider consulting a certified tax advisor or CPA familiar with crypto tax strategies. Always ensure accurate record-keeping for IRS compliance.

Dex