Investing? Withdrawing? Making Money? Did You Think About Taxes. Uncle Sam Is!
What Ya Gonna Do When Uncle Sam Comes For You!
Awesome your making money in the Cryptocurrency world, but are you moving too fast? Could you face serious consequences? Scary to think about especially if you haven't done so already. Yeah its awesome to make money but God forbid an audit. Or even worse an audit after reckless spending.
Bitcoin is not taxable but cashing out your coins are. These rates vary by country. Profits made on Crypto are taxable losses can also be claimed if no gain was made. Cryptocurrencies are considered a barter transaction or payment-in-kind. Gifts should also be reported as income. If you just bought bitcoins or any crypto you own you do not need to file or pay taxes. Any time you make a gain this is a taxable asset. Profits made from Crypto sold within a year if you withdraw are considered short term capital gains and are added to your regular income for tax purposes. Gains made from cryptocurrency after a year are considered a long term capital gains. Depending on your income this can be taxed at a rate of 0%, 15% or even 20% if you are in the top income tax- bracket. So when it comes to tax its ideal to keep investments in longer to benefit in cheaper rates.
Example
REST100 earns $60,000/yr. He buys 1 Bitcoin for $10 on June 1, 2013 and sells it on September 29th, 2013 for $1,000. The cost basis of the coin was $10 with a 0.5% fee, $10.05. The sale income also had a 0.5% exchange fee, so was in total $995. So my capital gain was $995 - $10.05 = $984.95. Since I owned the coin for a year or less, I report short term capital gains on my tax return the next year. The gain is added to my existing income and is taxed at my ordinary tax rate of 28%, so I pay $984.95 * 0.28 = $275.79 in additional taxes.
I hope this information at minimum helps someone
Content Credit Of Info Resource: https://bitcoin.tax/faq
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Tax liabilities will vary considerably by jurisdiction. I am in the UK and until recently the Tax office (HMRC) wanted to tax Bitcoin as a fixed asset. You would have to pay VAT (Value added tax) on every transaction (at 20%). This was quickly abandoned as unworkable and I believe it will be taxed as income (if earned by mining, blogging etc) or capital gains if bought, held and sold. I am not sure of the tapering effect of holding for longer but I will be consulting my accountant and discussing how this will work. Ill try and post on it afterwards.
ya def lmk
Why is it called uncle sam while in reality uncle abram or david ?
Idk I'm just here to protect new investors
So true ... its exciting to make money but when uncle sam comes knocking it can be devasting ... this definitely helps to be more cautious with spending habits!