From the IRS guidance: Q-16: Will taxpayers be subject to penalties for having treated a virtual currency transaction in a manner that is inconsistent with this notice prior to March 25, 2014? No, they'll pull an enormous number out of their ass and either (1) you pay that amount plus penalties, or (2) it's on you to do all the work to convincingly demonstrate the proper amount you should pay. [–][deleted] 2 points3 points4 points 3 years ago (0 children). [–]b1gb0n312 2 points3 points4 points 3 years ago (1 child), When I did many stock trades one year, the cpa that did my taxes just put one line on schedule D that says " multiple trades" and the value of the gains, [–]Lord_shitmeister 2 points3 points4 points 3 years ago (2 children). The IRS is not going to be jailing anyone for years. As others have said, it's a muddy, Wild West point of trade at the moment. It's been a week and a half and I can't make sense of what my gain/loss was so far. Shit, they even have less auditors than last year. They will say we see you've deposited $50K into your bank account and you now owe us $10K in tax. I have had situations where the rules and the records were not clear and I needed the benefit of the doubt. Wiped/locked accounts aren’t going to help our situation as well as exchanges not generating the tax information/forms needed for proper filing. It will then be up to YOU to prove otherwise by showing your records of purchase/sell price, losses through trades, exchange fees etc. I’ve yet to be audited. [–]superkp 6 points7 points8 points 3 years ago (0 children). This would mean that you'd have to pay tax on your full amount, not just the gains. The IRS views trading crypto for something of value as a type of bartering that must be included in income. Even when you don't make above the threshold required for paying taxes you STILL are required to file U.S. taxes. Owing capital gains/losses on the BTC based on its selling price (the fair market value at the moment of the exchange) and your purchase price (basis). [–]MasterlynGold | QC: CC 29 | r/Politics 19 15 points16 points17 points 3 years ago (115 children). I would be inclined to treat these fees as commissions. I used to do taxes for quantitative hedge funds who do thousands of trades a day/week. [–]lexbuckTin | r/Politics 132 2 points3 points4 points 3 years ago (6 children). IRS says pretty much its not an "in-kind" trade so I am looking at how forex is handled with regards to currency....but this is pretty ugly too. That needs to be the way they handle this, otherwise people will simply be unable to realistically pay their taxes in any accurate way. It's like double. You'd be an amazing business owner. That's exactly the opposite of the ethos of cryptocurrencies. [–]sleepie_headPlatinum | QC: CC 61 | NANO 10 30 points31 points32 points 3 years ago* (18 children). For now, I'm going to assume that you cash out by selling them for USD; however, other forms of cashing out will be covered later. 2 points3 points4 points 3 years ago (0 children), IRS agents have considerable discretion in what they decide to take seriously. I've made a lot of money. But the OP is correct. The "right position" would have to be profiting like a million or two in a year, and be able to find an accountant and/or lawyer to be on staff for me for a few months to make it right. What the hell do I do? Short term gains are taxed at your marginal income rate (basically, just like if you had earned that money at a job) while long term gains are taxed at lower rates. or is it simply a volume thing? This is true in a lot of areas dealing with taxes and regulation. I also would like to report everything just like you but as you stated this isn’t going to be as simple as it’s written. What if ETH had risen 5% on coinbase at that moment but Binance's ETH price had not? I'm not sure how much different this would be vs. online poker earnings, but I remember several years back I saw a stat that stated that ordinarily you have a 1% chance of being audited, however if you claimed and paid taxes on earnings, that percentage raised to 10%. I've seen this happen the IRS is run by morons in straitjackets. Summarize all the trades from a given exchange in the period and just call it one trade. same mate. Them prove? This shows a good faith attempt to comply with the rules even though the rules are hard to follow. The first thing you should know is that the majority of this discussion applies to the taxes you are currently working on (2017 taxes). how do i even report such taxes . A-16: Taxpayers may be subject to penalties for failure to comply with tax laws. They aren't just going to take your word for it, they'll make you prove you did what you said you did. [–]teebs241 - 2 year account age. If a government thinks you are evading taxes, they have to prove it so. but i have soo many trades on soo many platforms i cant show clearly how the money was made . CoinMarketCap (Cryptocurrency market cap info), 10k.pizza (Portfolio tracking. Most people submit their returns online, can you attach the excel spreadsheet of all your trades with the 8949? I would just base it on what you calculated you ought to owe based on your overall cost basis derived from the deposits and withdrawals. It would also be great to only have to report gains of crypto -> fiat and for them to figure out a fair way to tax merchandise purchases with crypto. Lastly, I'm starting off 2018 pretty poorly with probably 20-30 trades between 3 exchanges. Move to Denmark, Germany, Singapore, and file for citizenship, wait awhile, withdrawal (no crypto taxes). This makes it not so complicated, at least for most people's situations. It's not a court of law. I haven't cashed out to USD. The IRS just wants some of your hard earned USD. Basically, you owe tax on the value of BCH when you received it, but it isn't completely clear what that value was. Do I have to report this? [–]moontrader 25 points26 points27 points 3 years ago (0 children). This is basically why i am getting my altcoin positions nailed in by the end of the year and will just be sitting on my pile and not moving anything around during 2018 until i know how the **** to handle all of this. Administration? If you're super worried, just add up all bank statements from usd into coin, and add up the total worth of your whole portfolio, [–]Cloud9Altcoiner 15 points16 points17 points 3 years ago (7 children). I'm curious. That's my feelings on it. It covers some very basic tax principles. A lot of crypto investors and traders are nervous about winding up with an audit and tax bill years down the road that they can't afford. Just gonna try to give as close as I can to detail on it. 9 points10 points11 points 3 years ago (2 children), Just a friendly notice that this is certainly not how an audit would play out. [–]SteveBozell 4 points5 points6 points 3 years ago (0 children). I dont think it should be taxable until converted into USD. So this is where things are hazy right now. In this way, the taxing authority will always share in the portion of your gains that represent actual USD gains, which is, historically, all they have cared about. If they want the money bad enough to actually go and do all that work, they can have it. Illustrated as: Gain Ratio =Total USD Investment/Total Portfolio Value @ Distribution Date. I'll link to some I like (both more technical IRS type guides and more crypto community driven guides). When you sell crypto, you report the difference between your basis (purchase price) and proceeds (sale price) on Schedule D. Your purchase price is commonly referred to as your basis; while the two terms don't mean exactly the same thing, they are pretty close to one another (in particular, there are three two ways to calculate your basis - your average cost, a first-in, first-out method, and a "specific identification" method. Similar to how you don't owe capital gains taxes just because your house appreciates in value. It also assumes that all you did during the year was buy/sell a single crypto currency. The gains always defer into the future until you actually hold that money in your bank account. My line will basically be: I'm trying to pay you. Typically, these rules are used in real estate transactions. This article discusses this idea in slightly more detail and generally concludes that forks should not be treated as a dividend. A guy like Lukachenko, or Maduro in Venezuela, supporting cryptocurrencies, it's obvious that they will try to pick everyone's pockets later on. I have used, at one point or another, 10 different crypto exchanges. Will have exactly the same trouble reporting it to the tax authorities in my country, [–]cwrace71Redditor for 23 days. In the late 90's when they were getting their asses kicked by congressional hearings I acknowledged their struggles in my letter. r/CryptoTrade Nevermind the logistical insanity of the step-by-step fictional USD conversion process. If you give your crypto away to charity (one recognized by the IRS; like a 501(c)(3) organization), the IRS doesn't make you report/pay any capital gains on the transaction. The taxpayerâs history of income or losses with respect to the activity. This is a hot mess. All I shoot for is to report accurately enough to demonstrate that due diligence was done on my part. Just quickly looking in binance I see it doesn't tell you the USD value of a trade on the date it occurred, which is going to make this whole process a lot more painstaking. Keeping airtight books is fucking tedious and requires a full time bookkeeper or accountants. [–]loupiote2Gold | QC: CC 23 | NANO 19 2 points3 points4 points 3 years ago (1 child). Welcome to /r/CryptoCurrency. [–][deleted] 26 points27 points28 points 3 years ago (1 child). So donât think you can avoid crypto taxes or hide crypto profits from the IRS, especially if you have to Google how. I've heard good things about https://bitcoin.tax/ but not used it myself. The Cross team I'm sure would be good as well, also not cheap but they have the lawyers as well which I imagine would be a great help if you needed them too. Half the leadship team remains unappointed. If you are in the 39.6% bracket, long term gains are taxed at 20%. What's really funny to me is that what you're saying is what almost every accountant will, and should say. Maybe I'm dense, but why would that matter? PoliticsThe Absolute Fucking Impossibility of Reporting Taxes On This Shit (self.CryptoCurrency). r/OpenBazaar [–]TotesMessengerTin 9 points10 points11 points 3 years ago* (1 child). There are innumerable ways to avoid prying eyes from your crypto. If you're a rich white guy just say, "oops, sorry I didn't know. Like 40%, [–]MasterlynGold | QC: CC 29 | r/Politics 19 14 points15 points16 points 3 years ago (93 children). You as well. 35 - 100 comment karma. Declaring in good faith won’t get you in trouble. They effectively treat us as criminals even when we've done nothing wrong. I would rather pay a lower tax now than roll the dice on slipping through the cracks and risking paying even more if i am not lucky. I'm posting similar versions of it here, in several major crypto subs, and eventually in the weekly "tax help" threads r/personalfinance runs. Thatâs right â trading one crypto for another is a taxable event now. As an Individual, whose citizenship and place of residence fall within one of these developed countries, cryptocurrency transactions will likely create taxable ⦠For next year, incorporate in a tax haven and only trade on your company account. I'm split on if I want to claim an immediate loss on the exchange fees or roll those into the cost of the purchased coin/token. [–]TJ11240 14 points15 points16 points 3 years ago* (2 children). [–][deleted] 17 points18 points19 points 3 years ago (18 children). then, we'll figure out what i owe and ill pay. So for the crypto to crypto trades. Gold | QC: BTC 92, CC 91, CM 25 | r/JavaScript 44, Gold | QC: CC 39 | IOTA 12 | TraderSubs 14, Platinum | QC: XMR 300, BTC 58, CC 40 | r/Buttcoin 18. Whats the cost basis. People think they have rights and protections, but when it comes to money, Uncle sam does NOT fuck around. Literally millions of people are holding crypto and UNDER 1K people reported crypto holdings to the IRS in 2016. I'm dreaming of a .... Monero: Decentralized exchange... [–]highqi 22 points23 points24 points 3 years ago (11 children). If so, you’ll likely want to have them filed electronically and attach a pdf of your trades. [–]OfficiallyRelevant 34 points35 points36 points 3 years ago (29 children). I know what I deposited and I know what I've withdrawn and I know my account value at any given time. r/CryptoMarkets I got into the Crypto game about a year ago, using funds from my foreign bank account. Arguably, the easiest method of avoiding taxes on your cryptocurrency gains is to put them into a 401k, IRA, or any other qualifying retirement plan. Just like in 2018 herd mentality is stronger than ever. I mean shit an extra $1 on my ordinary income is an extra $0.25 to Uncle Sam, they could put it towards another $40,000,000 missile to blow up a children's hospital in the Middle East, [–]sandee_eggoTin 8 points9 points10 points 3 years ago (12 children). If you are interested in a more detailed discussion of forks, see this thread for a previous version of this post discussing it at even more length and the comments for a discussion of this with the r/tax community. r/LitecoinMining No, it's up to you to provide them with all the information they require, and make sure it's truthful and accurate. Capital gains, and might throw together a rough estimate of everything else in excel. [–]superkp 3 points4 points5 points 3 years ago (1 child), I'm new to all this stuff, so please forgive my ignorance -. 'Should I Have Been Writing All This Down?' I have an appointment with a CPA at the end of February but I almost guarantee that she's going to tell me to go chop wood. 145 points146 points147 points 3 years ago (120 children). Is there like a minimum bracket? If you’re taking that stance then you would report that exchange on form 8824. The US has such anti-double-taxation treaties with many countries. could be close 60% if you're over $200k. It's not always a case of "oh, just pay us what you owe us and we are all good", [–]Zero_Ghost24 65 points66 points67 points 3 years ago (33 children). The only way you can pull out at this point is by having some kind of front you pull USD through and hope it doesn't get caught. [–]discoltk 6 points7 points8 points 3 years ago (0 children). I'm not a tax professional, but as I understand if you live in say France my understanding is that you pay the French tax owed, then if the US tax owed is lower than the French one, you can deduct all the French tax paid so you end up paying nothing more. Pretty slim if you've got an operation making 5m in sales. So far no letters from the irs, i think they forgot about me :P, [–][deleted] 19 points20 points21 points 3 years ago (4 children). Even if I went to a tax attorney or CPA, as I intend to do, would they know more than me what with the terribly incomplete guidance the IRS has given about all this? I have software making 10-20k trades a day. r/GPUmining. [–]dmglakewoodPlatinum | QC: BTC 77, LTC 49, GPUMining 33 10 points11 points12 points 3 years ago (0 children). [–][deleted] 77 points78 points79 points 3 years ago (60 children). [–]etherbidRedditor for 3 months. I think in the end the only viable option would be a system that worked on the basis of an actual "Gain Ratio" at the time of any withdrawals. > 3 months account age. Its risky and requires you to babysit 24/7 and pray they don't find a better job and leave you holding the bag with books you can't cypher because of their changes. Say for example, you purchased 10 ETH a few years ago for $1,000 and itâs now worth $5,000. Although it's quite annoying to file in both countries, as far as I've seen you only pay whichever is higher. 200 - 400 comment karma. It seems to break down with volume of trades at some point which leads me to question how accurate it is for everyone. 2 points3 points4 points 3 years ago (0 children). [–]maaku7 7 points8 points9 points 3 years ago (0 children). Is that a loss? The IRS virtual currency guidance defines cryptocurrency as "property" and seems to concern itself with "exchange of virtual currency for other property", which is taxable. If you are in the 39.6% bracket, long term gains are taxed at 20%. Then you don't pay any tax on it. Not willing to go into any more detail than that sorry :), [–][deleted] 3 points4 points5 points 3 years ago (3 children).
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