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Bitcoin Investors Aren't Paying Their Cryptocurrency Taxes

Bitcoin Investors Aren't Paying Their Cryptocurrency Taxes

Despite months of warnings to pay their taxes on cryptocurrency profits , American Bitcoin investors arent in a hurry to tell Uncle Sam what they owe. Early data from one popular tax preparation service shows that only a minuscule proportionjust .04%of U.S. tax filers have reported their cryptocurrency gains and losses to the Internal Revenue Service so far this year. Thats far fewer than the 7% of Americans who are estimated to own Bitcoin or another cryptocurrency, and who are likely to owe taxes to the IRS on those investments. Of the first 250,000 people to file their tax returns using Credit Karma, fewer than 100 of them disclosed any taxable event for cryptocurrency. Of those, only a single person disclosed a crypto gain or loss big enough to be significant, according to Credit Karma, a free credit-monitoring startup. While its still early in tax seasonat last count , the IRS had received only 18.3 million individual tax returns so far this year, or some 13% of the total expected this tax seasoncryptocurrency investors still seem disproportionately reluctant to report their earnings. (Read our guide on how to pay Bitcoin taxes here.) For example, in a survey of more than 2,000 American cryptocurrency owners conducted in January by Credit Karma Tax along with research firm Qualtrics, some 57% of respondents said theyd realized gains on their crypto investmentsprofits the IRS considers taxable. And yet even more Americans (59%) said they had never reported any such gains to the IRS. Although users of Credit Karmas tax prep service arent representative of all U.S. taxpayers, they do account for a significant part. One million people filed their tax returns through Credit Karma Tax last year, the first time the company offered the online product. That makes the servi Continue reading >>

How Cryptocurrency Sales And Exchanges Affect Your Taxes

How Cryptocurrency Sales And Exchanges Affect Your Taxes

How Cryptocurrency Sales and Exchanges Affect Your Taxes Mario Costanz 2018-02-12T09:51:49+00:00 Cryptocurrency | Just a few years ago, Bitcoin and the myriad of alternative coins that followed were only known to tech-savvy professionals. Now, cryptocurrency is hot. So hot, in fact, that many financial professionals and government regulators are just now catching up. With more and more people using Bitcoin and other cryptocurrencies every day, there is a concerning lack of information available for those of us who want to get up-to-date on the hottest new technology in todays financial markets. If youre not sure, youre not alone. At the most general level, cryptocurrencies are alternatives to traditional currency. Bitcoins and some if the alternative coins or altcoins that followed it can be used to pay for anything from a cup of coffee to large equipment for your business. Anyone can buy, use, or sell cryptocurrency with the help of exchanges and digital wallets. Whether youre trading in Bitcoin, Ether, or any other altcoin, cryptocurrency transactions have tax impacts. This is especially true if youve been holding them in the hope their value will increase. Why Invest in Bitcoin or Other Cryptocurrencies? Currency is a store of value and a means of exchange, but it can also be used as an investment. This is true with traditional currencies which have been traded for hundreds of years as well as new virtual currencies. Currency trading involves the purchase and sale of currencies foreign, domestic, or alternative with the expectation of profiting from favorable exchange rates. Just like governments and big financial institutions, have done with traditional currencies for generations, small investors are now buying virtual currencies and holding them with the expectati Continue reading >>

Bitcoin Investors Arent Paying Their Cryptocurrency Taxes

Bitcoin Investors Arent Paying Their Cryptocurrency Taxes

Despite months of warnings to pay their taxes on cryptocurrency profits , American Bitcoin investors aren't in a hurry to tell Uncle Sam what they owe. Early data from one popular tax preparation service shows that only a minuscule proportionjust .04%of U.S. tax filers have reported their cryptocurrency gains and losses to the Internal Revenue Service so far this year. That's far fewer than the 7% of Americans who are estimated to own Bitcoin or another cryptocurrency, and who are likely to owe taxes to the IRS on those investments. Of the first 250,000 people to file their tax returns using Credit Karma, fewer than 100 of them disclosed any taxable event for cryptocurrency. Of those, only a single person disclosed a crypto gain or loss big enough to be "significant," according to Credit Karma, a free credit-monitoring startup. While it's still early in tax seasonat last count , the IRS had received only 18.3 million individual tax returns so far this year, or some 13% of the total expected this tax seasoncryptocurrency investors still seem disproportionately reluctant to report their earnings. (Read our guide on how to pay Bitcoin taxes here.) For example, in a survey of more than 2,000 American cryptocurrency owners conducted in January by Credit Karma Tax along with research firm Qualtrics, some 57% of respondents said they'd realized gains on their crypto investmentsprofits the IRS considers taxable. And yet even more Americans (59%) said they had never reported any such gains to the IRS. Although users of Credit Karma's tax prep service aren't representative of all U.S. taxpayers, they do account for a significant part. One million people filed their tax returns through Credit Karma Tax last year, the first time the company offered the online product. That makes t Continue reading >>

Wyoming Moves To Lift Cryptocurrency Property Tax

Wyoming Moves To Lift Cryptocurrency Property Tax

Wyoming Moves to Lift Cryptocurrency Property Tax Join our community of 10 000 traders on Hacked.com for just $39 per month. Wyoming just gave Americans another reason to live there. In a one-two punch to theUS Fed, the Wyoming Senate Bill 111 was introduced on Feb. 16, moving to exempt cryptocurrencies from property taxation, solidifying the states business tax-friendly reputation and lifting its profile for blockchain businesses in the interim. If the bill passes, not only would it be a boon for Wyomings economy, benefiting both individual investors and blockchain startups that would land there,but it could inspire other US states to similarly remove any hurdles that would interfere with the proliferation of the cryptocurrency market. Wyoming is already one of a handful of US states that dont charge income tax. By taking a similar approach with cryptocurrencies, its likely to fuel a blockchain-fueled economic boom thats already begun to unfold in the state. The IRS, meanwhile, classifies bitcoin and other cryptocurrencies as propertyand taxes them accordingly. Wyoming would ostensibly be removing one layer of taxation for investors, including both individuals and businesses. The bill, which is being sponsored by half-a-dozen Republican Senators and Representatives, includes virtual currencies among a list of other intangible items that shall be exempt from property taxation as soon as the bill becomes law. It defines virtual currencies as any type of digital representation of value that is 1.) used as a medium of exchange, unit of account or store of value, and 2.) is not recognized as legal tender by the US government. In addition to cryptocurrencies, the bill also extends to money and cash on hand including currency, gold, silver and other coin, bank drafts, certif Continue reading >>

Get Ready To Laugh: Here's How Many Americans Have Reported Crypto Transactions In Their Tax Filings

Get Ready To Laugh: Here's How Many Americans Have Reported Crypto Transactions In Their Tax Filings

Get Ready to Laugh: Here's How Many Americans Have Reported Crypto Transactions in Their Tax Filings Get out your magnifying glass, because the percentage is really, really small. A Fool since 2010, and a graduate from UC San Diego with a B.A. in Economics, Sean specializes in the healthcare sector and investment planning. You'll often find him writing about Obamacare, marijuana, drug and device development, Social Security, taxes, retirement issues and general macroeconomic topics of interest. Follow @TMFUltraLong Whether you're ready or not, we're right in the thick of tax season. For many Americans, tax season is something of a double-edged sword. On one hand, preparing your taxes can often be a confusing, tedious, and borderline hair-pulling experience. Prior to overhauling the tax code via the Tax Cuts and Jobs Act, which will factor into your tax filing next year, the U.S. tax code had been expanding by an average of 144,500 words a year for roughly six decades. This made keeping up with tax law changes almost impossible, even with the assistance of a tax professional or tax software. On the other hand, tax season usually sees tens of millions of Americans walk away with an average federal refund of between $2,700 and $3,100. Though getting a large refund is often not a smart move , this money typically goes a long way to boosting savings rates, as well as fueling sales growth at retailers, which helps the consumption-driven U.S. economy. Taxpayers are doing a really bad job of reporting cryptocurrency transactions This year, however, there's a relatively new complication for taxpayers and the Internal Revenue Service to be wary of: cryptocurrency capital gains. You see, the IRS considers digital currencies like bitcoin, Ethereum, Ripple, and Litecoin to be prope Continue reading >>

A Guide To Paying Taxes On Bitcoin Investments

A Guide To Paying Taxes On Bitcoin Investments

Making money on bitcoin, ethereum, and scores of other cryptoassets has been remarkably easy this year. But in the US, paying taxes on those gains could be a lot more complicated. Transactions that are routine to experienced crypto enthusiastslike hard forks, or swapping between coins at the tap of a buttonare fiendishly complicated when it comes to reporting to the Internal Revenue Service. And make no mistake: the agency is determined to make sure people pay what they owe. Over the course of bitcoins booms and busts, the IRS has noticed that tax returns arent lining up with the manic popularity of the cryptocurrency, according to Tech Crunch . Last month, a federal judge in San Francisco ruled that digital-asset exchange Coinbase must give the IRS information about users who made more than $20,000 in annual transactions in recent years. To help confused crypto investors, accountants like William Brock now specialize in the peculiarities of how the US tax code applies to these burgeoning assets. If youve made money on crypto this year, here are some pointers he says you should keep in mind. (Needless to say, this is not legal advice and its far from exhaustiveif you have specific questions, its best to consult with a tax professional.) People typically think about paying taxes on an investment after theyve sold it. But switching from one digital asset to another will trigger capital gains, even if you dont convert to dollars as an interim step. For example, trading ether for bitcoin and not reporting the gains on the ether will not pass muster with the IRS. A way around this relies on a like-kind exchange as described in Section 1031 of the tax code. (Are we having fun yet?) The rules on this can be ridiculously strict, Brock says. You cant use it for securities or to 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 >>

What You Need To Know About Cryptocurrencies And Taxes

What You Need To Know About Cryptocurrencies And Taxes

What You Need to Know About Cryptocurrencies and Taxes If you owned any Bitcoin (or any other popular cryptocurrency ) in 2017 you probably made a bunch of money. Now, with tax season on the horizon , you may be wondering how all that digital currency will affect your taxes. The Verge has a detailed guide on how to handle your 2017 taxes when it comes to Bitcoin. Here are a few key takeaways from the article to help you through the process. Who Needs to Pay Taxes on Cryptocurrencies? If you bought a bunch of Bitcoin when it was cheap and youre still holding onto it, then youre in luck. The Internal Revenue Service doesnt tax cryptocurrency holdings that have increased in value. You only have to worry about taxes if you sold your digital currency or used it to buy something else. Any cryptocurrency you mined can also be taxed. The same thing applies to any coins you got from the Bitcoin fork in August 2017 , though the IRS still hasnt cleared up exactly how that will work. Heres a chart from The Verge that should help you figure out how your cryptocurrency earnings will be taxed. The first thing youll need to do is create a record of all your cryptocurrency transactions. Some digital currency exchanges , like CoinBase , will actually send you a 1099 form, but only if you sold at least $20,000 in currency in at least 200 seperate transactions. Otherwise, youll have to find your own records, though most of them should be publicly available thanks to the blockchain. Then download all your transactions as CSV files. Youll also need to calculate exactly how much each transaction was worth in U.S. dollars at the time of sale, which isnt easy considering how volatile cryptocurrencies can be . Thankfully, there are plenty of sites that can show you the value of Bitcoin and othe Continue reading >>

Cryptocurrency And Taxes: The Impact Of Mining, Spending And Trading

Cryptocurrency And Taxes: The Impact Of Mining, Spending And Trading

Cryptocurrency and Taxes: The Impact of Mining, Spending and Trading When it comes to cryptocurrency and taxes, ambiguity reigns. Bitcoin and Ethereum are still in the early stages of development, and their values are extremely volatile. As of early December 2017, one bitcoin was fluctuating between $15,000- $18,000 , and its value has changed dramatically over the past year alone. Cryptocurrencies are designed to be a more efficient and reliable form of decentralized currency that anyone can buy and sell through online exchanges. They can be digitally traded for or exchanged into U.S. dollars, euros or any other form of currency (real or virtual). With the right computers, they can also be mined using complex computerized algorithms to uncover new cryptocurrency value, much like mining gold. But as cryptocurrencies grow in popularity and value, what are the tax implications for mining, trading and spending? Whenever cryptocurrencies are mined, bought, sold, spent or traded, there are tax implications. Taxpayers who receive crypto as payment for goods or services must determine the fair market value in U.S. dollars when received. Taxpayers who mine coins are subject to tax on the fair market value on the day mined. Depending on the business structure of the miner, the income could also be subject to self-employment tax. Accounting for cryptocurrency is just as important as accounting for buying and selling stocks and bonds. In 2014, the IRS declared cryptocurrencies should be treated as property for U.S. federal tax purposes and follow the general tax principles applicable to property transactions. This means theyre subject to capital gains tax, similar to stocks and bonds or real estate. In some cases, you may be considered a trader and the net income from your tradin 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 >>

How Cryptocurrencies Are Taxed: Paying Tax On Bitcoin And Other Cryptos

How Cryptocurrencies Are Taxed: Paying Tax On Bitcoin And Other Cryptos

Home Cryptocurrency How are Cryptocurrencies Taxed?Paying Taxes on Bitcoin and Other Cryptos How are Cryptocurrencies Taxed?Paying Taxes on Bitcoin and Other Cryptos Mohan Garikiparithi Profit Confidential 2018-03-07T13:25:41Z 2018-03-08 12:35:32 how are cryptocurrencies taxed bitcoin tax cryptocurrency taxes in us who needs to pay taxes on cryptocurrencies how to pay your cryptocurrency tax how taxes on cryptocurrencies work how to pay your bitcoin tax tax for cryptocurrencies on HODL tax on airdrops ICO taxes taxes on capital gains bitcoin profits bitcoin tax tax on short term gains tax on long term gains tax on purchasing goods and services tax liability on swapping cryptocurrency tax on bitcoin mining tax on foreign asset holdings This is everything you need to know about how cryptocurrencies are taxed in the United States, including how to gain tax exemptions on cryptocurrencies and bitcoin tax. Cryptocurrency The past year has seen a huge surge in the popularity of cryptocurrencies. Everybody and his brother are looking to make a quick buck by buying new cryptos for pennies and selling them for dollars.As the income comes pouring in, so do tons of tax-related questions, such as: "Do you need to pay taxes on cryptocurrencies?," "Are there any cryptocurrency taxes in the U.S.?," "Who needs to pay taxes on cryptocurrencies?," "How are cryptocurrencies taxed?," and "Who do I pay taxes to?"Well answer all of these questions and and more, and provide specific details like how to pay your Bitcoin tax. In 2014, the Internal Revenue Service (IRS) issued guidance to taxpayers, making it clear that virtual currency will be treated as a capital asset and that capital gains rules will apply to any gains or losses.Simple, right? Wrong; taxes are rarely simple.The IRS notes tha Continue reading >>

How To File Your Income Taxes On Bitcoin In 2018

How To File Your Income Taxes On Bitcoin In 2018

How to file your income taxes on bitcoin in 2018 Tips, tricks, and hacks for the tech in your life. Its been a turbulent year for bitcoin, and now its time to talk about taxes. Most people who held on to bitcoin over the past year made money off of it, and as Americans prepare for income tax season, the IRS wants its cut of the profits. Amid unprecedented gains and unprecedented enforcement efforts this looks to be the year that tax collectors get serious about bitcoin earnings, which means its a very good time to make sure youre doing everything right. So lets get into what youre reporting and how to report it. To simplify things, were only talking about bitcoin here, but note that these general guidelines apply to other cryptocurrencies as well. Also, none of this is legal advice, so if you have specific questions, its best to consult with a tax lawyer or accountant. Were talking about income tax, so your goal is to figure out your income from bitcoin in 2017. For the purposes of the IRS, that means bitcoin assets that were converted into non-bitcoin assets like cash or goods and services. Your bitcoin holdings arent taxable (at least not yet), but any time you sold bitcoin or used it to buy something, you were accruing taxable income. Youve already got records of most of those transactions, either on the blockchain or from your wallet provider, but converting it to dollars can be a real hassle since youll need to run the bitcoin value against the price of bitcoin at the time of the transaction. (You can look up the historical price of bitcoin here .) First, youll want to download all transaction data from the exchanges you use, usually available as CSV files, suggests Vincenzo Villamena, managing partner at Online Taxman , an accounting firm that specializes in cryp 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 >>

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 >>

The New Normal: Cryptocurrency Goes Mainstream This Tax Season

The New Normal: Cryptocurrency Goes Mainstream This Tax Season

The New Normal: Cryptocurrency Goes Mainstream This Tax Season Bitcoinist.net February 18, 2018 7:30 am Until quite recently, most cryptocurrency investors either did not know or did not care to pay taxes on the capital gains they accumulated buying and selling digital coins. The cryptocurrency community is now facing a hard truth: they have to pay taxes just like all the rest of us. [Editors note: This is a guest article by Mario Costanz , CEO of Crypto Tax Prep ] Virtual currencies exploded onto the investment scene last year, due in large part to the astronomical rise in the popularity of Bitcoin and its many successors. Interest in this exciting new investment shows no signs of slowing, and soon cryptocurrency will be as ubiquitous as the other traditional securities traded daily on Wall Street. Until quite recently, however, most cryptocurrency investors either did not know or did not care to pay taxes on the capital gains they accumulated buying and selling digital coins. The cryptocurrency community is now facing a hard truth: they have to pay taxes just like all the rest of us. The attention that virtual currencies are receiving from federal and state regulators is a positive sign that this innovative technology is heading towards the mainstream. Of course, it has a long way to go until it gets there. In the meantime, however, cryptocurrency investors need to accept the reality of growing government oversight. Paying Cryptocurrency Taxes is Not Optional Bitcoin emerged from an anonymous source far on the fringes of the internet nearly a decade ago. For a time, cryptocurrency traders enjoyed an investment environment free from government oversight. This has caused many investors to turn a blind eye to increasing regulation, particularly from the Internal Revenue Continue reading >>

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