"0.04% Of IRS Filers Reporting Bitcoin Gains FUD" - File For An Extension If You Need To
Regulars to my blog will attest to my lack of love for taxes, but I do always advise others that they should default to paying them in legally defensible method and only experiment at their own risk with "creative" accounting methods that the IRS may not be a huge fan of. Though I find US taxes onerous in both amount and form, I don't recommend "tax protest" as a form of political statement for the average bear.
Anyway, preamble aside, you are going to see headlines like this:
I consider this a form of FUD, basically, that's purpose is either click-bait reporting or attempting to paint cryptocurrency as lawless and its users as criminals.
Considering the epic meltdown of the Cryptomarket going into January, all your holds and trades were likely slaughtered unless you had the extreme prescience to know exactly when to cash out. Almost nobody took a 50% loss going into the end of December and then decided to liquidate, double-whammying themselves with a short-term trading income tax to boot. It just doesn't make sense.
These headlines might as well say "Only 0.04% Of Crypto Holders Predicted And Planned For Exact Date Of December Top."
Also, beware of the wash trading rule. It states (from memory...) that if you sell an asset, then buy it back within 30 days, you may not use those trades to set or adjust your cost basis for tax reporting purposes. No painting the tape with a loss and using your market timing skills to dodge the taxes. This is relevant for any crypto user trading into and out of their positions rapidly.
Remember, extensions are free and practically granted automatically. You will still need to pay any taxes owed by tomorrow, but if you are owed a refund, you can safely extend without further immediate action. If you need more time to sort these complexities out (preferably, with a newly motivated accountant with an empty entrance lobby after 4/17), then make sure to take it!
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Sources: Google, IRS.gov, TurboTax, TacAct, Nolo.com, Cornell Tax Law Library
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I paid my taxes. I'm square!
Nice little intrest free loan given out!
It is expected that only few will pay taxes on their gains of bitcoin esp those individuals who are trading with it. But I think the exchanges will have no escape in paying taxes since they need to register their businesses in the government.
Overall agree with your message. I definitely agree this is fear, uncertainty and doubt - the media is citing a totally unrealistic statistic. A more realistic statistic is Coinbase IRS court case - 6% (800 returns reporting Bitcoin transactions versus 13,000 summoned). And that was before mainstream came into Bitcoin, so how can the number of filers be lower than it was for 2015?
Only tokens treated as securities are subject to wash sale. However it is the most conservative to assume the rule applies to all crypto as the IRS could release more guidance and retroactively apply it.
Also here is more information about extensions and estimating crypto taxes for the extension. Not shilling, this is a long expired post:
https://steemit.com/money/@cryptotax/need-additional-time-to-nail-down-crypto-taxes-file-an-extension
Curious what you mean by this. Isn't fungibility the basic thing you need for wash sale rules to apply? Why does security status (which is only ambiguously defined anyway) have anything to do with it?
Hi @biophil, hope this helps:
The "wash sale" rule applies to stock or securities by design of the Code Section (not just any item of property). Also, there are a certain rules that would apply only to cryptocurrencies that are deemed "securities" for purposes of the Internal Revenue Code. This could all change in the future when more guidance is issued, however I highlighted a few of these nuances in an old article: https://steemit.com/bitcoin/@cryptotax/tax-implications-of-trading-ico-tokens-impacts-to-2017-tax-season
I see, thanks. I'll take a look at the other article!
Come and get it IRS!
xD
The IRS should be abolished... what do they expect? They are purposely making it super hard for crypto hodlers and day traders alike.
Maybe if they just took a modest cut of whatever you cash out to fiat more people would report it? It looks like a nightmare the way they have it set up right now.
Im glad im holding for the long long term...the IRS is a joke! Needs to be torn down and rebuild from the ground up!
taxation on capital/investment gains is pure theft, plain and simple. The invested money has already been taxed when you got it (income tax) then it is being taxed again when gains are made. Not only that but you are taking all the risk and the government is getting a risk-free ride of all profits. And if you lose money, you are on your own, it's not even deductible (only $3000/yr in losses can be deducted). So the government taxes you twice and you do all the work and bear all the risk. And on top of all that, they waste the money left and right & line their pockets & the pockets of their cronies & corrupt friends. Pure theft, no different than the mafia/gangs...but at least gangsters put their life/freedom on the line, these guys are immune, it's all legal.
Oh, in that case feel free to ignore my other comment.
Taxation is theft.
When will they abandon the income tax that was started to fund wars! Wars do no good. When has war benefited the human race??
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@lexiconical I really enjoyed this post and yes the IRS FUD does get many of us down. I just wanted to ask you if you would UP Vote my latest post. I normally don't E BEG for people to come to my BLOG but since I am going to be giving Away 70% of the payout on the 7th Day to help STEEM Ghana then I don't think that it is wrong to ask for others UP vote just once. Thank You