Topic: Are American tax laws holding Bitcoin back? - page 2. (Read 460 times)
That's right, the america has never been friendly to crypto with all those draculian rules and regulations that they have implemented. Also, note that China is also one of the countries that is very hostile the the development and growth of cryptocurrencies. These two countries are part of the world's most famous countries and if they are to go back on their decisions towards crypto i think it will be a great relief!
My feeling is that very few people are reporting capital gains realized by spending. There is no tax reporting on the merchant side, and transactions aren't directly linked to the spender's identity like a credit card or bank account. That creates a lot of incentive to treat Bitcoin like cash and ignore taxes altogether when spending.
I think the authorities will start monitoring the sellers at some point also and will require them to provide details of each transaction that it involves cryptocurrency. You buy a TV for BTC and you completely ignore to pay any tax (except VAT), but it is not too hard to connect the customer to the actual transaction and ask him to explain where he actually gets that BTC.
The most direct way to do this is to introduce a legal obligation on each payment processor to submit such information to tax offices every year.
Indeed. I believe that's still a few years away. No current laws require merchants to collect consumer KYC information nor issue Form 1099, so the IRS cannot unilaterally require it.
If/when the US passes the FATF travel rule into law, KYC will be required at the $1,000 threshold. BitPay has implemented KYC in preparation for this. But even at that point, very few people will reach the $20K/200 transaction threshold to receive Form 1099-K, so nothing will be reported to the IRS. For those that do, they can spread their purchases around to different processors to prevent reporting.
If these taxes were used for the development of the crypto industry, then it would be good.
Taxes may be a thing but it's the attitude of the authorities and the government that's holding bitcoin back. Most of the people would not mind paying a little from their profit if they are buying and selling from legal medium. It's the use of crypto in money laundering and terrorism that troubles the authorities. Their consequences is much dire than tax evasion.
I believe that taxes can affect Bitcoin to some extent, however, we must be clear that most of Bitcoin and cryptocurrency transactions are related to trading and not so much in the purchase of goods and services. I share the opinion of
avikz in the sense that it is better to have a rigorous legal framework than to have none.
avikz in the sense that it is better to have a rigorous legal framework than to have none.
In my opinion, Bitcoin is tax-free that is why I think using Bitcoin as a direct method of payment fees are more possible than with taxes I think there are not many that are using direct payment with Bitcoin but I think most people are exchanging with fiat first and mostly they are surely not using bitcoin at all because they are using it as a term as asset, Than a method of payment. I guess if there is a possibility that someone may need the money that badly that will be an instant that they may use their Hodl Bitcoin.
It doesn't change that much. Even without tax, it is still used, and considered by most people as store of value. Bitcoin still hasn't found an effective solution for addressing scalability. Lightning network looks promising though, but comes with drawbacks such as some point of centralization is introduced. If Bitcoin could surpass that limitation, then I think it would progress much faster, and demand would be real by that time.
Yes, to some extent! US tax authority IRS is taking harsh measures to stop bitcoin and its impact on the economy disguised as a friend! In US, bitcoin is considered as a property instead of a security. That's the reason why people are liable to pay capital gains tax if they want to sell off their holdings! Even crypto to crypto swap calls for a tax event! So you can easily fathom the complexity a day traders has to face while declaring their tax. However, professional help is also available to make things easier for you!
US was always clear about their tax related matters! While the tax rules are pretty strict which gives you a very little chance for hiding anything, but not very unrealistic! Having a proper legal framework is always better than living in a limbo!
Wow, I knew about the capital gains tax, but I never thought of it this way. I thought of it imagining a person who's been holding BTC for, like a year, profited from it and has to pay a part of such profits to the government. And yeah, that also sucks, but at least it makes some sense. Why does every single transaction call for taxes? I mean, if the exchange rate between cryptos was roughly the same, there would be no capital gained, right? So why does the person have to pay or at least to the paperwork?US was always clear about their tax related matters! While the tax rules are pretty strict which gives you a very little chance for hiding anything, but not very unrealistic! Having a proper legal framework is always better than living in a limbo!
When it comes to Bitcoin and taxes, I love the Singapore situation. Only income tax is applicable, and it's progressive. Moreover, if the revenue is below $20k per year, the person/company does not have to pay taxes at all.
My feeling is that very few people are reporting capital gains realized by spending. There is no tax reporting on the merchant side, and transactions aren't directly linked to the spender's identity like a credit card or bank account. That creates a lot of incentive to treat Bitcoin like cash and ignore taxes altogether when spending.
I think the authorities will start monitoring the sellers at some point also and will require them to provide details of each transaction that it involves cryptocurrency. You buy a TV for BTC and you completely ignore to pay any tax (except VAT), but it is not too hard to connect the customer to the actual transaction and ask him to explain where he actually gets that BTC.
The most direct way to do this is to introduce a legal obligation on each payment processor to submit such information to tax offices every year. I personally have not yet purchased anything and paid directly to the seller in his personal crypto wallet, everyone uses payment processors like BitPay, CoinGate or CoinPayments. It would be desirable for things to remain as they are today, but I think it is only a matter of time before spending will start to be much more strictly controlled.
That means for every trade or every cup of coffee you buy with Bitcoin, you have to report capital gains. Someone correct me if I’m wrong on this.
Basically if this is true, then essentially in America right now, Bitcoin is just a long term investment rather that a method of payment. Could this be holding Bitcoin back from a greater potential for value?
Basically if this is true, then essentially in America right now, Bitcoin is just a long term investment rather that a method of payment. Could this be holding Bitcoin back from a greater potential for value?
Yes for every trade that generates profit and for every cup of coffee the U.S's citizens buy using bitcoin.
Trading and use bitcoin as a payment method are two different things, however, the federal still want everything people have earned.
The IRS has made it mandatory to report bitcoin transactions of all kinds, no matter how small in value. Thus, every US taxpayer is required to keep a record of all buying, selling of, investing in, or using bitcoins to pay for goods or services (which the IRS considers bartering). Because bitcoins are being treated as assets, if you use bitcoins for simple transactions such as buying groceries at a supermarket you will incur a capital gains tax (either long-term or short-term depending on how long you have been holding the bitcoins). When it comes to bitcoins the following are different transactions that will lead to taxes
read more
It is my understanding that in America, every cryptocurrency transaction has to be reported as a capital gain in the end of year taxes. That means for every trade or every cup of coffee you buy with Bitcoin, you have to report capital gains. Someone correct me if I’m wrong on this.
Basically if this is true, then essentially in America right now, Bitcoin is just a long term investment rather that a method of payment. Could this be holding Bitcoin back from a greater potential for value?
Basically if this is true, then essentially in America right now, Bitcoin is just a long term investment rather that a method of payment. Could this be holding Bitcoin back from a greater potential for value?
Every transaction? Or every trade from cryptocurrency to fiat?
It makes a stronger debate to support no-KYC, decentralized exchanges like BISQ, and decentralized marketplaces like OpenBazaar.
My feeling is that very few people are reporting capital gains realized by spending. There is no tax reporting on the merchant side, and transactions aren't directly linked to the spender's identity like a credit card or bank account. That creates a lot of incentive to treat Bitcoin like cash and ignore taxes altogether when spending.
i believe that is why some countries have started treating bitcoin as a legal way of payment without any taxes (like Japan) and only focus on taxation when you buy or sell bitcoin with fiat inside exchanges because that is what they can control and monitor since it involves fiat (banks) and also it helps grow the economy.
The trading part you got correctly but the buying part is where you are wrong. Using Bitcoin as a currency to pay won't be counted as capital gain since you really didn't “gain” anaything from using it as a payment.
I can't speak for the US but that's not how it works in the UK. If I buy a car with Bitcoin and that Bitcoin was bought for less than the value I'm realising that car sale is subject to capital gains on the difference in price. It's classed as a disposal just the same as selling it directly.
Since alt to alt trades are now treated that way in the US it's probably the same set up for any type of purchase but don't quote me.
We have an allowance that I don't think exists in the US so you can spend freely up to that amount with no tax on the gain.
The American tax situation sounds like a right pain up the arse so I have no doubt it does turn off potential users.
It is my understanding that in America, every cryptocurrency transaction has to be reported as a capital gain in the end of year taxes. That means for every trade or every cup of coffee you buy with Bitcoin, you have to report capital gains. Someone correct me if I’m wrong on this.
The trading part you got correctly but the buying part is where you are wrong. Using Bitcoin as a currency to pay won't be counted as capital gain since you really didn't “gain” anaything from using it as a payment. Basically capital gain is what you earn when your assets raised its market value where not holding it like using it to pay won't hold anything to make it raise its market value. And to answer your second question no taxes aren't holding back cryptocurrency even if the people feel discourage with the IRS enforcing crypto hodlers to pay taxes it's not the biggest factor why it is holding back crypto adoption in the country.
It is my understanding that in America, every cryptocurrency transaction has to be reported as a capital gain in the end of year taxes. That means for every trade or every cup of coffee you buy with Bitcoin, you have to report capital gains. Someone correct me if I’m wrong on this.
Basically if this is true, then essentially in America right now, Bitcoin is just a long term investment rather that a method of payment. Could this be holding Bitcoin back from a greater potential for value?
Basically if this is true, then essentially in America right now, Bitcoin is just a long term investment rather that a method of payment. Could this be holding Bitcoin back from a greater potential for value?
bitpay released some data that shows people spend more as the price rises:
Quote
The more valuable bitcoin has become, the more people are using it to buy stuff. ”We have definitely seen a ‘wealth effect’ pattern when the bitcoin price increases,” says James Walpole, BitPay’s marketing manager.
the takeaway for me is that---taxes aside---most people view bitcoin first and foremost as an investment asset. spending as a currency is a secondary concern.
in fact for many, i think spending bitcoin is a way to take profits out without paying taxes. i've never come across anyone who reports gains/losses with every purchase. they just neglect to report the original buy and then spend it as cash.
It is my understanding that in America, every cryptocurrency transaction has to be reported as a capital gain in the end of year taxes. That means for every trade or every cup of coffee you buy with Bitcoin, you have to report capital gains. Someone correct me if I’m wrong on this.
It could be a capital gain or loss. If you bought bitcoins at $13,000 and spent them at $6,500 you obviously don't owe any taxes on the purchase. In fact, that capital loss could offset other capital gains you may have realized during the tax year.
It's an accounting nightmare, though.
Basically if this is true, then essentially in America right now, Bitcoin is just a long term investment rather that a method of payment. Could this be holding Bitcoin back from a greater potential for value?
My feeling is that very few people are reporting capital gains realized by spending. There is no tax reporting on the merchant side, and transactions aren't directly linked to the spender's identity like a credit card or bank account. That creates a lot of incentive to treat Bitcoin like cash and ignore taxes altogether when spending.
Yes, to some extent! US tax authority IRS is taking harsh measures to stop bitcoin and its impact on the economy disguised as a friend! In US, bitcoin is considered as a property instead of a security. That's the reason why people are liable to pay capital gains tax if they want to sell off their holdings! Even crypto to crypto swap calls for a tax event! So you can easily fathom the complexity a day traders has to face while declaring their tax. However, professional help is also available to make things easier for you!
US was always clear about their tax related matters! While the tax rules are pretty strict which gives you a very little chance for hiding anything, but not very unrealistic! Having a proper legal framework is always better than living in a limbo!
US was always clear about their tax related matters! While the tax rules are pretty strict which gives you a very little chance for hiding anything, but not very unrealistic! Having a proper legal framework is always better than living in a limbo!
It is my understanding that in America, every cryptocurrency transaction has to be reported as a capital gain in the end of year taxes. That means for every trade or every cup of coffee you buy with Bitcoin, you have to report capital gains. Someone correct me if I’m wrong on this.
Basically if this is true, then essentially in America right now, Bitcoin is just a long term investment rather that a method of payment. Could this be holding Bitcoin back from a greater potential for value?
Basically if this is true, then essentially in America right now, Bitcoin is just a long term investment rather that a method of payment. Could this be holding Bitcoin back from a greater potential for value?
Jump to: