Say I have a bitcoin that was worth $20.00 4 or 5 years ago. Say I cash it in (no idea how) and I get $20K so technically I've made a bigger than huge profit. How much of that would I have to pay in California and Federal taxes?
It all depends, but there's something like a 50% taxable rate for realized capital gains in Canada, if you made $1 or $10,000 (provided that it is in a taxable range) then you'd still be paying the 50%, either $0.50 or $5,000. It's not like the taxes grow more, the total sum just gets taxed more than what they would have been provided that you had earned less. I don't know what the tax rates are for the United States but I would assume that they're a bit less than those you find in Canada because this country seems determined to push away investors with exorbitant tax rates on everything.