Spent The Afternoon At the Accountants.
There's always an apprehensive feeling I get as I sit in my accountant's office getting ready to go through my crypto taxes. In the greater scheme of things, it's more about not really knowing what you're walking into. Let's face it, when you're making 5000 to 10,000 trades a year, taxes can get a bit complicated!
Frankly, this is a new technology, and we could probably use a new tax system to go with it. I'm not sure about the rest of the world but in the U.S. you're pretty much taxed on every trade and also each time you spend crypto.
On top of that, when you start getting into transferring your cryptocurrency in and out of exchanges, then take into account all your trades, it gets extremely complicated! Frankly, it's almost impossible to keep track of it all or make sense of it. For the most part I use CoinTracking to keep track of my trades. I'm also able to produce some great reports with it. I then give the report to my accountant to figure it all out. I'll post a link to CoinTracking at the bottom of the post. It's free to sign up and it's really worth a look.
It pisses me off that I have to pay for a service to keep track of my trades and pay an accountant to figure it all out. Then probably send the government another check to cover my capital gains tax. I'm literally paying two people (software and accountant) to pay a third person (the government). Only the government could make it that difficult to pay them and get away with it.
I really don't think it needs to be this complicated. Sooner or later people have to cash out, why not just set up a flat tax collected at the time of cash-out to fiat. With this system people would be free to build their trading accounts, actually get a real tax shelter, then when they're ready to spend some of those sweet crypto gains and they cash out to fiat or make a really large purchase like a house, the government gets their cut through a flat tax. Seem fair enough to me.
It doesn't really get any simpler than that. On top of that, they should make small online payments tax exempt.
Don't get me wrong, I'm not a tax lover. As a matter of fact I honestly dislike paying taxes. Plain and simple it's extortion. Pay me or you're going to jail. The Dood prefers to not end up in jail so he pays his taxes. I guess all I'm saying is they really should make it easier for the average person to pay.
Last year CNBC reported that a very small amount of people actually claimed their crypto gains. This was after a bull run that just about everyone made money in. As a matter of fact, not to be mean, but if you were a trader in 2017 and didn't make money, you need to get out of the game! My point is, when the crypto community saw record gains, the IRS should have received record crypto returns. They didn't!
https://www.cnbc.com/2018/04/13/hardly-anyone-is-paying-taxes-on-their-bitcoin-gains-as-filing-deadline-nears.html
I remember reading several other articles about this topic, but that was the only link I could find.
Can you honestly blame people for not reporting? There is so much confusion. The average person doesn't even know where to start. Frankly, I got lucky. A friend of mine knew a local accountant that understood cryptocurrency and cryptocurrency taxes. I must of talked to 50 accountants before that, most of them either didn't want to mess with it, or wanted a ridiculous amount of money to make sense of it all. I bet in some cases, people aren't filing because they don't know how, and can't find anyone to help them.
Well, I wrote this post in my accountants waiting room and I've now returned home. I'm happy to announce I took enough losses in 2018 to actually garner a refund. I'm pretty happy I didn't have to pay this year, happier I'm getting a refund, but a little pissed off at all the loses I incurred. I intentionally cashed out some losses at the end of 2018 for this reason. I had more crypto than money so I thought it was a good idea. Really wasn't expecting a refund though. Pretty stoked..... Now what shitcoin will I buy with my returns ;)
i felt like i was one of the few crypto people who actually claimed it on their taxes. i know a lot of people who just didn't, and it wasn't out of confusion. most accountants i ran into just wanted to charge a ton to deal with any of it too, though.
Everyone I know makes fun of me for claiming my gains. I'm just trying to stay out of trouble. At the end of 2017 it was obvious that not claiming would be a seriously criminal offense if I got caught. Good news is I had a lot of losses to offset my gains in 2018! Same here though, accountants either come right out and say "I don't know how to deal with that", "I'm not messing with that", or wanted a ridiculous amount of money!