Random Thoughts with Cryptokidd
With the tax man looming in a few days here in the U.S. everyone in the crypto game is once again scratching their heads wondering what to claim what to pay and how to do it. I am really hoping that 2018 brings more clarification on some of the expectations of this complicated tax situation. How can anyone calculate the proper tax implications of what they owe? Why is it so difficult to come to a popular consensus of what these cryptos are? How do you pay tax on something that nobody can agree on what it even is? Are they securities, currencies, assets, tokens? Most of the conversations I have had with people always end up in the same place, nowhere. Most people have no problem paying a reasonable tax liability on these but don't feel that what has been explained to them is fair.
The fact that the IRS is (I believe) expecting traders to realize a recognized taxable gain everytime any and every trade is executed would be an accounting clusterfuck. Are traders able to write off their bad trades that lose value against gains? It is complicated enough trying to navigate our way through an always evolving tax code, now try and mix cryptos into that. Good luck finding a tax accountant that would even be willing to put their name on it. For now fingers crossed that this gets simplified in the near future. Good luck to all.
I actually switched my tax preparer this year because I found an accounting firm that had one specialist in crypto. They're still learning too but I appreciate that they can see where the future is headed.
I found that the cointracking/cointracker system worked pretty well. You can sync up your accounts and it figures out your gains/losses. For a fee, it also prepares the IRS form you need to submit. The Bittrex account was the toughest to sync up but I think it worked. I'll be honest, my capital gains number was shocking and at first I thought it was wrong. Then I started looking manually and I realized it was right.
As a noob, I bought and sold way too much just trying to learn. In 2018, I've already reduced it to almost nothing. Of course, this bear market really has been the cause of that. But, it's smarter to hold for at least a year. Short term capital gains (less than a year) are taxed higher than long term (more than a year).
I hope people do their best and report their crypto gains and losses. It's only a good thing if this community stays compliant with the law. It seems authorities and politicians will take any chance to demonstrate how "corrupt" cryptocurrency is.
It is indeed a nightmare and keeping your finger's crossed wont help much. If the community unites and hires lobbyist, it could change the way taxes are done. Right now tax software company lobbyist control the government in the us and the more complicated things are the better for them.