2021 was a boom year for cryptocurrencies and NFTs, with many investors realizing massive financial gains when selling crypto or NFTs. Meanwhile, this has moved so fats that we have some uncertainty as to how the IRS will treat these gains. Of course investors will need to declare realized gains, but the applicable tax rate may be different between crypto and NFTs:

Specifically, an investor who sells an NFT, such as digital art, may owe a top 31.8% federal tax rate on any earnings. By comparison, appreciation in bitcoin, ethereum and other digital coins is subject to a 23.8% top rate.

That’s because NFTs are likely collectibles, for tax purposes. Collectibles carry a higher maximum tax rate on capital gains relative to assets like stocks, bonds and cryptocurrencies.

The IRS has not made a formal announcement, but tax experts are fairly confident that NFTs will be treated as collectibles. Keep this in mind as you plan your finances for 2022.

The tax debate is raging on Capital Hill, and now we have this surprise from Alan Greenspan.

Former Federal Reserve chief Alan Greenspan, reversing a long-standing aversion to higher taxes, said Wednesday tax rates must rise and the fiscal stimulus wound down in order to reduce the U.S. budget deficit and allow private investment to expand.

“I am in favor for the first time in my memory of raising taxes,” Greenspan told an audience at the Council on Foreign Relations in New York. He said the economy could not recover while the high deficit remains high.

Greenspan warned that the deficit, swollen by massive stimulus spending, was crowding out capital investment. We “must find a way to simmer down fiscal activism and allow the economy to heal,” he said, adding that stimulus spending had been far less successful than anticipated.

Conservatives won’t be happy to hear this, but the reality of the long-term deficit needs serious solutions. Greenspan is stating the obvious.