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Guide To Cryptocurrency Taxes: A Guide To Common Tax Situations

Guide To Cryptocurrency Taxes: A Guide To Common Tax Situations

Guide to Cryptocurrency Taxes: A Guide to Common Tax Situations Always remember to share your gains with the government By Aziz, Founder of Master the Crypto No responses Home Commentary Guide to Cryptocurrency Taxes: A Guide to Common Tax Situations )This article on cryptocurrency taxes discusses the potential tax impacts of your Cryptocurrency investments, attempting to address several tax issues. The objective of this piece is to provide information about your tax obligations as defined by United States law. The publication was first featured on Reddit . Based on the rapid increase in popularity and price of bitcoin and other cryptocurrencies (particularly over the past year), I expect that lots of people have questions about how cryptocurrency will impact their taxes.Please note that this article attempts to provide information about your tax obligations as defined by United States law (and interpreted by the IRS under the direction of the Treasury Department). It is understood that a certain portion of the crypto community tends to view crypto as tax-free due to the (actual and perceived) difficulty for the IRS to know about the transactions involved. This article will not discuss unlawfully concealing crypto gains here nor will I suggest illegal tax avoidance activities. This introductory section is great for those that arent familiar with taxes. It covers some very basic tax principles and assumes that all you did during the year was buy/sell a single cryptocurrency. Fundamentally, the IRS treats crypto not as money, but as an asset (investment). While there are a few specific twists when it comes to crypto, when in doubt replace the word crypto with the word stock and you will get a pretty good idea how you should report and pay tax on crypto. The first thing y Continue reading >>

Cryptocurrency And Taxes: What You Need To Know

Cryptocurrency And Taxes: What You Need To Know

Cryptocurrency and taxes: What you need to know It looks like 2018 will be a landmark year when it comes to the IRS and taxing cryptocurrency gains. The IRS treats cryptocurrency as property, so there are capital gain implications. The best way to minimize is to buy and hold for more than a year. Vincenzo Villamena, founder and CEO of Online Taxman Bitcoin had its coming-out party in 2017. With all the excitement and opportunities around cryptcurrency, it might be easy to forget about crypto taxation. Almost every bitcoin or other "altcoin" transaction mining, spending, trading, exchanging, air drops, etc. will likely be a taxable event for U.S. tax purposes. Without a doubt, 2018 will be a landmark year for Internal Revenue Service enforcement of cryptocurrency gains. Taxpayers should stay ahead of the game rather than be reactionary. The IRS is always more lenient with taxpayers who come forward on their own accord rather than those that get discovered. Coming forward now actually could be the difference between criminal penalties and simply paying interest. With only several hundred people reporting their crypto gains each year since bitcoin's launch, the IRS suspects that many crypto users have been evading taxes by not reporting crypto transactions on their tax returns. Don't put all your financial eggs in one investment basket Unfortunately, the IRS has provided very little guidance with regard to bitcoin taxation. One thing, however, is clear: Although both the public and the crypto community refer to bitcoin and altcoins as virtual currencies, the IRS treats them as property for tax purposes. Therefore, selling, spending and even exchanging crypto for other tokens all likely have capital gain implications. Likewise, receiving it as compensation or by other mean Continue reading >>

Tax Tips For Bitcoin And Virtual Currency

Tax Tips For Bitcoin And Virtual Currency

Tax Tips for Bitcoin and Virtual Currency Tax Tips for Bitcoin and Virtual Currency Virtual currency like Bitcoin has shifted into the public eye in recent years. Some employees are paid with Bitcoin, more than a few retailers accept Bitcoin as payment, and others hold the e-currency as a capital asset. Recently, the Internal Revenue Service (IRS) clarified the tax treatment of Bitcoin and Bitcoin transactions. Convertible virtual currency is subject to tax by the IRS Bitcoin is the most widely circulated digital currency or e-currency as of 2017. It's called a convertible virtual currency because it has an equivalent value in real currency. The sale or exchange of a convertible virtual currencyincluding its use to pay for goods or serviceshas tax implications. The IRS answered some common questions about the tax treatment of Bitcoin transactions in its recent Notice 2014-21 . Tax treatment depends on how Bitcoins are held and used. Bitcoin used to pay for goods and services taxed as income If you are an employer paying with Bitcoin, you must report employee earnings to the IRS on W-2 forms . You must convert the Bitcoin value to U.S. dollars as of the date each payment is made and keep careful records. Wages paid in virtual currency are subject to withholding to the same extent as dollar wages. Employees must report their total W-2 wages in dollars, even if earned as Bitcoin. Self-employed individuals with Bitcoin gains or losses from sales transactions also must convert the virtual currency to dollars as of the day earned, and report the figures on their tax returns. Bitcoins held as capital assets are taxed as property If you hold Bitcoins as a capital asset, you must treat them as property for tax purposes . General tax principles applicable to property transaction Continue reading >>

The Basics Of Cryptocurrencies And Taxes

The Basics Of Cryptocurrencies And Taxes

Cryptocurrency Basics The Basics of Cryptocurrencies And Taxes Do you like our content? Or, do you want to test out a new wallet? Feel free to send some coins to one of our wallets public addresses. All donated funds will go toward improving the site. The content of this website is provided for informational purposes only and cant be used as investment advice, legal advice, tax advice, medical advice, advice on operating heavy machinery, etc. Our site is not officially associated with any brand or government entity. Any mention of a brand or other trademarked entity is for the purposes of education, entertainment, or parody. Neither CryptocurrencyFacts.com nor its parent companies accept responsibility for any loss, damage, or inconvenience caused as a result of reliance on information published on, or linked to, from CryptocurrencyFacts.com. In other words, this is a website on the internet offering free information about cryptocurrency, this is not your accountant, lawyer, or fiduciary offering you professional tax, legal, or investment advice. See our about page for more disclaimers and information. How Do Taxes Work With Cryptocurrency? Paying Taxes on Cryptocurrency in the United States For tax purposes, in the U.S., cryptocurrency is generally treated as property (a capital asset like stocks, bonds, and other investment properties). It is not treated as currency like the U.S. dollar. That means it is teated like real estate or gold in most cases, and thus it is subject to the short and long term capital gains tax in most cases when held for investment (if used for transactions, as an individual or business, then other rules can apply; see official IRS guidance and state guidance below). [1] [2] [3] [4] With that said, there has been some confusion or like-kind pr Continue reading >>

Taxes From A To Z (2018): K Is For Kin (crypto)

Taxes From A To Z (2018): K Is For Kin (crypto)

Taxes From A To Z (2018): K Is For Kin (Crypto) Its my annual Taxes from A to Z series! If youre wondering whether you can claim home office expenses or whether to deduct a capital loss, you wont want to miss a single letter. Kin (KIN) is a digital currency created to incentivize users to interact with Kik, an instant messaging app. Kik announced its debut on May 25, 2017, describing the new cryptocurrency as designed specifically to bring people together in a new shared economy. Kin was implemented on the public Ethereum blockchain as an ERC20 token. As a cryptocurrency, Kin is similar to Bitcoin (BTC). Like Bitcoin, Kin has monetary value, though the intent is focused on trading for goods and services on the Kik platform rather than investing. In fact, Kik envisions that Kin will hold real value both inside and outside of the chat application. Kik is oneof more than 1,600 cryptocurrencies available today.Some currencies like Bitcoin, Ethereum (ETH), and Ripple (XRP)have names that people recognize. But others, like VeChain (VEN), Nano (NANO), and Zcash (ZEC) are just picking up steam as interest in crypto and digital currencies grows. Unfortunately, the relatively meteoric rise of many of these currencies means that guidance both in terms of investing and taxes may be limited. If youre tempted to dip your toes into the crypto world, heres what you need to know for federal income tax purposes. The first thing to understand is that just because you dont physically hold cryptocurrency in your hands (or in your non-virtual wallet) doesnt mean that its not taxable. In 2014, the Internal Revenue Service (IRS) issued guidance to taxpayers (downloads as a pdf) making it clear that virtual currency is taxable and is treated as a capital asset, provided that it can be converte Continue reading >>

Bitcoin Accountant | Bitcoin Income Tax | Crypto Tax

Bitcoin Accountant | Bitcoin Income Tax | Crypto Tax

Complete your simple 2-step client on-boarding questionnaire. We configureyour data upload via API or CSV and prepare your standard return and 8949 form. Final call with your specialist to go over your return, sign, and submit to the IRS. Marios team at CryptoTaxPrep.com has taken the stress out of my crypto tax situation. Im now worry free. Ben Le Roux, Product Marketing Manager @ Google After understanding the process, it was fast easy and guaranteed! Very professional and made it very easy for me! Great experience! My bitcoin.tax reportwas way off and the team at CryptoTaxPrep.com was able to find the errors, and complete my return with accuracy. Efficient and nice to work with very professional! Aftertrying Cointracking.info and getting the wrong reports, I decided to use CryptoTaxprep.com. My experience was fast, easy, accurate. Complete your simple 2-step client on-boarding questionnaire. We configureyour data upload via API or CSV and prepare your standard return and 8949 form. Final call with your specialist to go over your return, sign, and submit to the IRS. Marios team at CryptoTaxPrep.com has taken the stress out of my crypto tax situation. Im now worry free. Ben Le Roux, Product Marketing Manager @ Google After understanding the process, it was fast easy and guaranteed! Very professional and made it very easy for me! Great experience! My bitcoin.tax reportwas way off and the team at CryptoTaxPrep.com was able to find the errors, and complete my return with accuracy. Efficient and nice to work with very professional! Aftertrying Cointracking.info and getting the wrong reports, I decided to use CryptoTaxprep.com. My experience was fast, easy, accurate. We love crypto! Thats why we have made it possible to purchase your Crypto Tax Prep + Accounting service wi Continue reading >>

How To Calculate Taxes On Your Crypto Profits

How To Calculate Taxes On Your Crypto Profits

Profiting off crypto means making capital gains Reconsider thinking the IRS doesnt care about crypto. Take the IRSs recent legal case against Coinbase, one of the largest cryptocurrency companies in the world. In late 2016, it demanded Coinbases customer records in a bid to investigate potential tax fraud. A year later, a California federal court ordered Coinbase to hand over customer records of anyone transacting $20,000 or more in any year between 2013 and 2015. Why did the IRS want this information? Because it suspected many people incurred tax liabilities on their crypto purchases liabilities that had long gone unpaid. Make no mistake: Cryptocurrency is taxable, and the IRS wants in on the action. Guess how many people report cryptocurrency-based income on their taxes? According to the IRS, only 802 people did so in 2015. Thats a minuscule figure, seeing as 150 million people file a return each year. This means most individuals dont pay taxes on their crypto something that might change as more people are audited by the IRS. According to the US government, crypto isnt a currency. Instead, for most people its a capital asset think stocks, bonds, investment properties and so forth. If youve heard of capital gains and wondered what those are, just think of crypto. Did you buy bitcoin and sell it later for a profit? Thats a capital gain. If you sold it and lost money, you have a capital loss. So, taxes are a fact of life even in crypto. Thats the bad news. But theres good news: Figuring out your tax bill isnt as difficult as it sounds. Which IRS forms do I use for capital gains and losses? Use IRS Schedule D (Form 1040) Capital Gains and Losses and Form 8949 Sales and Other Dispositions of Assets. Calculating your crypto taxes for gains and losses takes just three steps Continue reading >>

What You Need To Know About Taxes & Cryptocurrency

What You Need To Know About Taxes & Cryptocurrency

What You Need To Know About Taxes & Cryptocurrency A visual representation of the digital Cryptocurrency, Bitcoin alongside US Dollars on December 07, 2017 in London, England. Cryptocurrency is riding high these days. But even as more investors are taking a chance on new currencies like Bitcoin, Ethereum, and Ripple, many are still confused about how to treat itfor federal income tax purposes. In 2014, the Internal Revenue Service (IRS) issued guidance to taxpayers (downloads as a pdf) making it clear that virtual currency will be treated as a capital asset,provided they are convertible into cash.In simple terms, this means that capital gains rules apply to any gains or losses. But taxes are rarely simple. Things can get complicated very quickly. Here are the basics: For those taxpayers buying and selling cryptocurrency as an investment, calculating gains and losses are figured the same as buying and selling stock.That's true, as well, when it comes tobasis, holding period and a triggering event. For those treating cryptocurrency like cash - spendingit directly for goods or services, or using it to buy other cryptocurrencies - the individual transactions may result in a gain or a loss. I know, the basics aren't quite so basic. Here's a deeper dive into some of the more complicated bits: First, how do you calculate capital gains? For tax and accounting purposes, capital gains and losses are calculated by determining how much your cost basis has gone up or down from the time you acquired the asset (in this case, cryptocurrency) untilthere's a taxable event. Okay, you've already lost me. What's basis? Basis is, at its most simple, the cost that you pay for assets. The actual cost is sometimes referred to as "cost basis" because you can make adjustments to basis over time. Continue reading >>

Think Cryptocurrency Is Confusing? Try Paying Taxes On It

Think Cryptocurrency Is Confusing? Try Paying Taxes On It

Technology |Think Cryptocurrency Is Confusing? Try Paying Taxes on It The room was full of stressed-out cryptocurrency traders. And for once, they werent nervous about the price of Bitcoin, or the roller coaster swings of the virtual currency markets. No, the subject of this gloomy affair was taxes. Specifically, how and whether to pay them. With this years April 17 tax filing deadline fast approaching, many virtual currency traders are sweating over their tax returns. Theyre confused by the complicated rules, many of them stemming from guidelines issued by the I.R.S. in 2014, governing the taxation of virtual currencies. Theyre afraid that the windfall profits created by last years cryptocurrency boom, which sent currencies like Bitcoin and Ether skyrocketing and created a new class of crypto-millionaires, have left them with huge tax bills. And, of course, theyre worried about drawing the eye of the Internal Revenue Service. Ive lost sleep over it, said Shaun, a trader who said he was still figuring out how to properly account for last years cryptocurrency profits on his taxes. Shaun, who asked that his last name not be used because he has been audited in the past, said he was scared that increased scrutiny of the cryptocurrency market could lead the I.R.S. to pay special attention to cases like his. I dont want to be made an example of, he said. This gathering, which took place last week in Manhattan and was organized by Blockmatics, a research and education company, featured three accountants who specialize in cryptocurrency tax preparation. For an hour, the audience peppered them with tax-prep questions that ranged from common (Do I have to pay taxes on Bitcoin if I havent sold yet?) to esoteric (If my Bitcoin wallet got hacked and all my coins got stolen, can I d Continue reading >>

Uncle Sam Doesnt Care How You Report Crypto Tax Gains Just Do It

Uncle Sam Doesnt Care How You Report Crypto Tax Gains Just Do It

Uncle Sam doesnt care how you report crypto tax gains just do it By Perry Woodin, opinion contributor 02/15/18 11:30 AM EST The views expressed by contributors are their own and not the view of The Hill If you havent heard about a company called Coinbase in the past 12 months, youve either been living under a rock or deliberately avoiding the bitcoin hype train. Ill make it quick. Coinbase is a San Francisco based cryptocurrency brokerage and exchange; its the blockchain industrys first unicorn, and has accrued over 13 million customers in less than six years. The exchange lets people link bank accounts to buy and sell four digital currencies, including Bitcoin, Bitcoin Cash, Litecoin and Ethereum. The reason for the background is because the millions of Coinbase users across the country who made gains in their cryptocurrency portfolio (or digital wallet) in 2017, must report their gains to Uncle Sam. Now that we are in the midst of tax season, crypto enthusiasts are scrambling to do the right thing before the April 15 deadline. And it is extremely important they know a few things. First, while its has been a legal requirement since 2014 (digital currency is currently identified as a form of property), very few Americans actually disclose their capital gains to the IRS . Some deliberately avoid it because they think blockchain is synonymous with anonymity and therefore wont get caught. Bad move. The government is already working with blockchain analytics companies like Chainalysis so they can uncover large USD sells that go unreported. Some simply forget about cryptocurrency tax compliance, because they only have experimental stakes in the asset class. Also a bad move. Every digital currency transaction incurs a gain or loss and therefore triggers taxable event, no mat Continue reading >>

Got Bitcoin, Ethereum, Or Ripple? Be Careful How You File Your Taxes

Got Bitcoin, Ethereum, Or Ripple? Be Careful How You File Your Taxes

Got Crypto? Be Careful How You File Your Taxes YOU KNOW THE OMINOUS FEELINGthat comes with wayward glances at a calendar any time after January 1stit starts as an inkling, and then, grows into something darker by the week, the closer you get to April 15th. And now, Tax Day, as ever, looms large. But this year, perhaps, is a bit different from the last fewyouve got a bit of money invested in cryptocurrency. And though currencies like Bitcoin, Ethereum, and Ripple are poised to transform the financial system (not to mention your bank account), where it concerns your taxes, regulations concerning crypto arent quite there yet. [Before we get into the answer, a quick caveat: we here at Futurism Dot Comarent remotely close to tax professionals. Honesty, even Certified Public Accountants (CPAs) and Enrolled Agents (EAs) the people you pay to handle your taxes arent totally sure how to approach some aspects of cryptos. Basically what were saying is not that you would but were telling you, explicitly, not to use this article as a definitive source of information on this matter. Like you, we hate doing our taxes, so were definitely not doing yours. Also, because we like you: Please, please, please, for the love of god and your freedom from a minimum security prison, consult a professional before you file your taxes.] One of the most appealing aspects of cryptocurrency, you may be thinking, is its anonymity. Doesnt that mean the government cant find my money?you might think.And, well, not exactly. For one, Bitcoin isnt all that anonymous. The parties on either end of a transaction are marked with pseudonyms . And its not that hard to link your pseudonym to your actual identity. Online vigilantes have unmasked extremist groups receiving donations via crypto; organizations such as Continue reading >>

Bitcoin Price Crashed In Mass Selloff As Crypto Owners Try To Avoid Taxes

Bitcoin Price Crashed In Mass Selloff As Crypto Owners Try To Avoid Taxes

Bitcoin Price Crashed in Mass Selloff as Crypto Owners Try to Avoid Taxes By Samantha Chang | Updated March 16, 2018 8:15 AM EDT How Coinfloor's Bitcoin Futures Differ from CME, CBOE Bitcoin prices collapsed this week amid a flurry of bearish cryptocurrency news, but the mass sell-off maysimply be due to investors wanting to avoid the Tax Man. Tax experts say cryptocurrencyholders may be rabidly selling off their holdingsin order to avoid paying capital gains taxes, which in some instances are substantial due to bitcoin's soaring prices in 2017. For younger people who don't have taxes top-of-mind, or have never invested before, they're shocked," Cathie Wood, CEO & CIO at ARK Invest, told CNBC .People had huge gains last year, and they don't have enough in crypto to pay those." Vincenzo Villamena, founder and CEO of OnlineTaxman, agreed.I see people that bet the farm on it," he noted.They're stuck with a large tax bill and they're doing payment plans, or they're selling off crypto. Bradley Rotter, vice chairman of Rivetz, saidthe capital gains that U.S. investors earned from their cryptocurrency holdings could pay for President Trump's border wall.(See also: Are There Taxes On Bitcoins? ) The amount of capital gains from just U.S. investors in the rise of crypto pays for the damn wall. I think most people are just connecting those dots but its an important dot. Bitcoin Prices Started Crashing After IRS News Went Public Circumstantial evidence seems to support this "tax-evasion" theory. Indeed, the price of bitcoin and its sister cryptocurrencies all started to plummet in tandem starting in late-February, shortly after top crypto exchange Coinbasewas ordered to turn over data on its customers. (See more: IRS Wants to Tax Your Bitcoin Gains: Orders Coinbase to Hand Over U Continue reading >>

How To Handle Cryptocurrency On Your Taxes

How To Handle Cryptocurrency On Your Taxes

How to handle cryptocurrency on your taxes You sold some bitcoin. Now the IRS wants its cut. Before you jump into this explanation of how cryptocurrency affects your taxes, check out our first article in this series: Bitcoin, explained . It's been a wild ride for cryptocurrency enthusiasts over the past few months. After ascending to a high water mark of $19,205 in December 2017 , the world's preeminent cryptocurrency -- that's bitcoin -- shed more than half its value over the 60 days that followed. (As of mid-February, it's climbed back past $10,000.) Other virtual currencies, including Litecoin and ether , also saw precipitous drops. Now, in the wake of that dramatic swing, it's time to start thinking about taxes. The freewheeling universe of cryptocurrencies has so far mostly evaded the cumbersome, complex regulations customary in most other US financial markets. That's likely to change in 2018, however, given the SEC's closer scrutiny of virtual currencies . In fact, a number of state and federal agencies are increasingly concerned about the individual and systemic risks cryptocurrencies pose. Those range from good old-fashioned fraud to more novel cybercrimes, as well as the distinct possibility the government has forfeited massive amounts of tax revenue to this secretive market since 2013. The chairmen of the US Securities and Exchange Commission and Commodity Futures Trading Commission testified at a Senate hearing about virtual currencies in January. The attention is likely warranted. An SEC lawsuit filed against Coinbase last year revealed that fewer than 900 taxpayers reported gains related to bitcoin between 2012 and 2015, even though more than 14,000 Coinbase users recorded transactions of $20,000 or more during the period. Read: The IRS guidance on cryptoc Continue reading >>

At Tax Time, Who Really Owns That Crypto Anyway? - Expert Take

At Tax Time, Who Really Owns That Crypto Anyway? - Expert Take

At Tax Time, Who Really Owns That Crypto Anyway? - Expert Take IRS marks cryptocurrency as property, it might prompt you to consider the concept of ownership. In our Expert Takes, opinion leaders from inside and outside the crypto industry express their views, share their experience and give professional advice. Expert Takes cover everything from Blockchain technology and ICO funding to taxation, regulation, and cryptocurrency adoption by different sectors of the economy. If you would like to contribute an Expert Take, please email your ideas and CV to [email protected] . Bitcoin and other cryptocurrency is a property for federal tax purposes. That can be painful since just about any transfer of property can trigger taxes. Even crypto for crypto swap cannot qualify as a tax-free 1031 exchange , according to the Tax code. For tax purposes, transfers are treated as sales unless you can find some other way of transferring cryptocurrency tax-free . The fact that the Internal Revenue Service (IRS) marks crypto as property might prompt you to consider the concept of ownership. If you are holding crypto for someone else, is it really yours, or not? In other words, if you are holding the crypto for the benefit of someone else, who has to pay the taxes? The answer may be not 100 percent clear. Start with the proposition that federal income tax liability is generally allocated based on ownership under local law . The issues can be intensely factual. Who has to pay can turn on who has control over and benefits and burdens of the property. The same thing can happen with bank accounts. There may be one nominal owner, but the money might effectively be held in trust for someone else. Who has to pay tax on the interest, may be questionable. To make matters more confusing, l Continue reading >>

The Irs Is Coming For Your Cryptocurrency Profits | Money

The Irs Is Coming For Your Cryptocurrency Profits | Money

Investors arent the only ones interested in big cryptocurrency profits. The IRS has a growing curiosity about them too. And that could spell trouble for cryptocurrency investors who made out like bandits in 2017, when Bitcoin and altcoins enjoyed a break-out year. Recently, the popular cryptocurrency exchange Coinbase capitulated to the IRS and the courts and announced that it would send requested transaction information on approximately 13,000 of its users. This is to comply with a court order issued in November. Coinbase fought this summons in court in an effort to protect its customers, and the industry as a whole, from unwarranted intrusions from the government, the company wrote in its announcement to customers. For Coinbase, this move represents the latest in a string of bad news for the exchange. A few weeks ago, a number of users expressed their frustration after the exchange inadvertently charged them multiple times for past purchases. Then last week, competitor Circle bought the exchange Poloniex, in an effort to compete with Coinbases scale . But for cryptocurrency investors, this may be even worse news, as the IRSs victory represents the latest blow to the perceived independence of cryptocurrencies, which are in the crosshairs of a growing number of regulators around the world. Few Taxpayers are Reporting Their Cryptocurrency Gains Last year, the 10 best-performing cryptocurrencies posted a verage price gains of 14,000 %, versus the 20% returns for the stock market. Yet few taxpayers appear to be reporting their crypto trades. Last month, Credit Karma said that of the more than 250,000 people whove already turned in their 2017 taxes via Credit Karmas filing service, fewer than 100 reported any cryptocurrency transactions. Thats less than 0.04% . To be sure, Continue reading >>

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