If you think investing in bitcoin or a similar “crypto-currency” may be a good method for hiding income from the tax man, you’d better think again.
Topic: Best non-taxable way to cash in your BTC? (Read 13094 times)
Wow, I bet you never imagined that come 2017 (just four years after your post), bitcoin would be worth $18,000. And you were dreaming of $1k. Man, I hope you kept all of those bitcoin you were talking about. If so, you are probably living on your own private island by now, paying taxes to yourself!
Pay your capital gains tax, and sleep well knowing that you won't go to jail. And be glad it's just capital gains, and not self-employment income.
There is no way to prove it's capital gains. Will Bitcoin Foundation send you a 1099? In absence of proof, you will pay highest tax rate applicable to you.
Pay your capital gains tax, and sleep well knowing that you won't go to jail. And be glad it's just capital gains, and not self-employment income.
Thats funny! I have self employment tax that I have to pay as well 
On top of my taxes for my business income. Punishment for being an entrepreneur and small business owner in the USA. You should have registered as a C-Corp instead of a S-corp,LLC or sole proprietorship.
Anyhoo in the USA only the decedent of rats a.k.a. Zionist are allowed to be rich.
My friend suggested buying Gold on the site which sells Gold for BTC.
Then once you have that physical item in hand, you can sell the gold for cash in hand. Then I guess you need to keep the cash under your mattress?
Then once you have that physical item in hand, you can sell the gold for cash in hand. Then I guess you need to keep the cash under your mattress?
Buying Gold solves nothing when you selling it for cash anyway. It is the same as selling bitcoins for cash on Localbitcoins.
Best is spending the BTC slowly, buying products/services for bitcoins directly.
You dont, but if you dont live in Germany, you dont have to move there, its enough to open a company.
Move to Germany or at least open a company for 1€ there and pay 0 taxes.
I thought you don't need to have a company in Germany to enjoy the tax free BTC gains?
Move to Germany or at least open a company for 1€ there and pay 0 taxes.
The best way to financially benefit from your bitcoins is to:
1) Leave the US with your bitcoins.
2) Live in some other country that has less onerous taxation.
3) Enjoy a lower cost of living and absence of an oppressive police state.
1) Leave the US with your bitcoins.
2) Live in some other country that has less onerous taxation.
3) Enjoy a lower cost of living and absence of an oppressive police state.
Not many countries out there that'd tax income on capital gains less than the US
well, countries in western europe, anyway
Pay tax and enjoy your bitcoins legally!
Hire an attorney, trust me. If you have something significant you want to cash out they will be able to light up your world with all sorts of options to reduce tax burdens, especially if you have never been in a circumstance of large personal financial gain
Once you begin making purchases that don't coincide with the income you're reporting, the IRS will eventually start asking questions. Your question should really be "What kind of income can I claim that isn't taxable?" and then try to make it seem you earned your bitcoins that way.
Exactly, there are many ways to legally "evade" taxes.Just look at large cooperations, some of them mange to pay less than 1%.
When it's legal, the technical parlance is "tax avoidance". "Tax evasion" is a non-payment of taxes the State considers illegal, and it may go after suspected "violators".
Once you begin making purchases that don't coincide with the income you're reporting, the IRS will eventually start asking questions. Your question should really be "What kind of income can I claim that isn't taxable?" and then try to make it seem you earned your bitcoins that way.
Exactly, there are many ways to legally "evade" taxes.Just look at large cooperations, some of them mange to pay less than 1%.
Naturally, evading tax is evading tax, and bitcoin itself really has nothing to do with that, with the exception of helping to circumvent Customs controls on the transfer of value.
This.
Once you begin making purchases that don't coincide with the income you're reporting, the IRS will eventually start asking questions. Your question should really be "What kind of income can I claim that isn't taxable?" and then try to make it seem you earned your bitcoins that way.
Being US citizen, you can only cash out bitcoins 100% legal way, if you:
1) Prefer to pay taxes: Transfer it to your bank account and pay capital gains tax.
2) Prefer not to pay taxes: Buy some Caribbean citizenship (i.e. Dominica), give up your US citizenship, move to a tax free country (i.e. Belize), then cash out bitcoins and enjoy paying zero taxes legally (as I do ).
Second choice will cost you about $200K but it's not a problem when you have a few thousands of BTC at $1K each.
1) Prefer to pay taxes: Transfer it to your bank account and pay capital gains tax.
2) Prefer not to pay taxes: Buy some Caribbean citizenship (i.e. Dominica), give up your US citizenship, move to a tax free country (i.e. Belize), then cash out bitcoins and enjoy paying zero taxes legally (as I do
).Second choice will cost you about $200K but it's not a problem when you have a few thousands of BTC at $1K each.
2 options:
- legal tax "optimisation"
- illegal tax evasion
Both vary with you domicile; where you pay tax.
The USA taxes worldwide income. There are legal ways to reduce tax paid. I'm not from the USA so I don't know those details but they probably involve things like deferring.
Outside the USA every situation is less Kafka. The UK doesn't tax spreadbetting for one so you could hold your gains in a spreadbetting account. There are probably different holes and incentive programs for each country around the world. A whole industry is built on optimising tax. The likes of Starbucks pay to find ways to reduce exposure. The one I've seen companies do is overcharge from a tax efficient place (i.e. Taiwan) to a subsidiary in a tax expensive place (i.e. UK). In the most basic way you can open a company in a lower tax country, open an account at an exchange and bank account and then cashout that way.
Then there's evasion. I'm not sure if it's even legal to discuss this in some countries? Nevertheless this has been reported on recently in major newspapers like the Guardian. That Canadian tax evasion leak so we saw a peak into this world with that. Basically financial privacy is very difficult to get these days but the key thing is that it's still very possible. All those money laundering post 9/11 rules have done is increase the costs. Basically the difference now is that you have to bank in a different country to your company, do more research and pay higher fees. Regards moving cash around the Guardian article shun a light on many methods - one of them was basically suing yourself in a sham courtcase.
I've researched these things just for interest's sake. I'm drawn to all the subjects you're not supposed to know. Knowing how all these multimillion corporations manage to pay zero tax feels very empowering.
Just how rich do you need to be to join the elite this way?
Setting up a company in a tax haven with all the associated anonymity costs = ~>$3000/year
Getting banking for that company = Tends to need a balance of $50,000 minimum but really this is the realm of private banking which tends to be >$500,000
Consultants fees, seeing as you'll probably want some professional help along the way = ~$2,500
I think really it's a case of $100,000 minimum required to tax evade like the elites do.
But there's a problem.
Part of my research has been into trying to find out where the elites are parking their cash and what banks are safe. In short... nearly no banks are safe. The G-20 has recently discussed and therefore it's believed recently approved Cyprus style bail-in plans with anglophone countries confirmed on those plans. So you can't simply pick banks with good credit ratings. Thus fiat in the banks is at risk. Getting away from this risk is very difficult since the G20 is most of the world and the countries left over aren't considered stable. AFAIK the elites haven't moved cash but some cash has probably moved to the more stable nations.
What's the best response to this?
Many elites have been buying things like art and antiques. I'm sure there's a lot more going on behind the scenes (i.e. secured vs unsecured deposits) but we'll never hear about it and if we do it'll probably get blocked.
So Bitcoin probably isn't that good for security but unless you have $100,000+ it's the best you got. So... don't cash out.
- legal tax "optimisation"
- illegal tax evasion
Both vary with you domicile; where you pay tax.
The USA taxes worldwide income. There are legal ways to reduce tax paid. I'm not from the USA so I don't know those details but they probably involve things like deferring.
Outside the USA every situation is less Kafka. The UK doesn't tax spreadbetting for one so you could hold your gains in a spreadbetting account. There are probably different holes and incentive programs for each country around the world. A whole industry is built on optimising tax. The likes of Starbucks pay to find ways to reduce exposure. The one I've seen companies do is overcharge from a tax efficient place (i.e. Taiwan) to a subsidiary in a tax expensive place (i.e. UK). In the most basic way you can open a company in a lower tax country, open an account at an exchange and bank account and then cashout that way.
Then there's evasion. I'm not sure if it's even legal to discuss this in some countries? Nevertheless this has been reported on recently in major newspapers like the Guardian. That Canadian tax evasion leak so we saw a peak into this world with that. Basically financial privacy is very difficult to get these days but the key thing is that it's still very possible. All those money laundering post 9/11 rules have done is increase the costs. Basically the difference now is that you have to bank in a different country to your company, do more research and pay higher fees. Regards moving cash around the Guardian article shun a light on many methods - one of them was basically suing yourself in a sham courtcase.
I've researched these things just for interest's sake. I'm drawn to all the subjects you're not supposed to know. Knowing how all these multimillion corporations manage to pay zero tax feels very empowering.
Just how rich do you need to be to join the elite this way?
Setting up a company in a tax haven with all the associated anonymity costs = ~>$3000/year
Getting banking for that company = Tends to need a balance of $50,000 minimum but really this is the realm of private banking which tends to be >$500,000
Consultants fees, seeing as you'll probably want some professional help along the way = ~$2,500
I think really it's a case of $100,000 minimum required to tax evade like the elites do.
But there's a problem.
Part of my research has been into trying to find out where the elites are parking their cash and what banks are safe. In short... nearly no banks are safe. The G-20 has recently discussed and therefore it's believed recently approved Cyprus style bail-in plans with anglophone countries confirmed on those plans. So you can't simply pick banks with good credit ratings. Thus fiat in the banks is at risk. Getting away from this risk is very difficult since the G20 is most of the world and the countries left over aren't considered stable. AFAIK the elites haven't moved cash but some cash has probably moved to the more stable nations.
What's the best response to this?
Many elites have been buying things like art and antiques. I'm sure there's a lot more going on behind the scenes (i.e. secured vs unsecured deposits) but we'll never hear about it and if we do it'll probably get blocked.
So Bitcoin probably isn't that good for security but unless you have $100,000+ it's the best you got. So... don't cash out.
Btw, if you are a US citizen, you can't simply move out of the country to avoid paying taxes. As long as you are a US citizen, you need to file a tax return.
That's legally correct, but I don't see how Totalitarian Sam can enforce that, unless you return to the US.
Quote
Anyways, better than buying gold is simply to sell your coins on localbitcoins. You'd be surprised on how easy it is. Seriously, you can sell tens of thousands of dollars worth a month there without even trying.
Indeed.
I don't consider "tax evasion" to be immoral at all, but neither would I recommend it.
Naturally, evading tax is evading tax, and bitcoin itself really has nothing to do with that, with the exception of helping to circumvent Customs controls on the transfer of value.
Anyways, better than buying gold is simply to sell your coins on localbitcoins. You'd be surprised on how easy it is. Seriously, you can sell tens of thousands of dollars worth a month there without even trying.
I'm barely trying and nothing. LB needs competition badly. I have ideas but no coding skills to implement.
[/quote
Are you priced competitively? No one goes by mt gox anymore. Look at coinbase, campbx, and bitstamp and price yourself at some small margin above that.
It also helps if you are in a metropolitan area too, I suppose.
Anyways, better than buying gold is simply to sell your coins on localbitcoins. You'd be surprised on how easy it is. Seriously, you can sell tens of thousands of dollars worth a month there without even trying.
I'm barely trying and nothing. LB needs competition badly. I have ideas but no coding skills to implement.
I thought of the gold idea a couple of months ago. I even bought a couple of ounces of gold on coinabul to see how easy it would be.
There are a couple of problems with it though:
- Websites like coinabul charge a fairly large markup above gold spot price
- Unless you know where to sell, you could end up selling for a lot less than spot. Go for a place that charges a flat fee, something like $30 per ounce.
- There is paperwork you will need to fill out when you sell. It's mostly so they can make sure you pay collectable gains on the gold you sell if there is any. You probably won't owe taxes since you are selling as soon as you buy but it does leave a paper trail for the IRS to follow.
- If you do owe gains, most people assume you can pay long term capital gains if you held onto the gold for more than a year. This is NOT TRUE. You ALWAYS pay short term capital gains and your state tax might be much higher too! Gold is a horrible investment for this reason. You can owe up to 40% in taxes on gains on it depending on what state you live in.
- It is illegal to evade taxes and if you get caught you face some serious penalties.
- It is arguably immoral to evade taxes.
- Finally, if it is actually a large enough sum of money, the IRS will notice and track you down everntually. Maybe you should buy a car wash and launder the money.
I decided that the best thing to do is simply hold on the the coins for more than a year and pay the relatively low capital gains tax. You can point to the records on a exchange as to when you actually bought the coins. Mining is a bit more tricky, especially since you probably actually owe income tax on coins mined. I'm sure there is a lot of fudging as to how people report which coins they bought when and when they sold since it is impossible to know actually how many coins a person has.
Btw, if you are a US citizen, you can't simply move out of the country to avoid paying taxes. As long as you are a US citizen, you need to file a tax return. You won't owe the same federal taxes (I'm not sure how it changes exactly) but you can't avoid taxes completely that way.
Anyways, better than buying gold is simply to sell your coins on localbitcoins. You'd be surprised on how easy it is. Seriously, you can sell tens of thousands of dollars worth a month there without even trying.
There are a couple of problems with it though:
- Websites like coinabul charge a fairly large markup above gold spot price
- Unless you know where to sell, you could end up selling for a lot less than spot. Go for a place that charges a flat fee, something like $30 per ounce.
- There is paperwork you will need to fill out when you sell. It's mostly so they can make sure you pay collectable gains on the gold you sell if there is any. You probably won't owe taxes since you are selling as soon as you buy but it does leave a paper trail for the IRS to follow.
- If you do owe gains, most people assume you can pay long term capital gains if you held onto the gold for more than a year. This is NOT TRUE. You ALWAYS pay short term capital gains and your state tax might be much higher too! Gold is a horrible investment for this reason. You can owe up to 40% in taxes on gains on it depending on what state you live in.
- It is illegal to evade taxes and if you get caught you face some serious penalties.
- It is arguably immoral to evade taxes.
- Finally, if it is actually a large enough sum of money, the IRS will notice and track you down everntually. Maybe you should buy a car wash and launder the money.
I decided that the best thing to do is simply hold on the the coins for more than a year and pay the relatively low capital gains tax. You can point to the records on a exchange as to when you actually bought the coins. Mining is a bit more tricky, especially since you probably actually owe income tax on coins mined. I'm sure there is a lot of fudging as to how people report which coins they bought when and when they sold since it is impossible to know actually how many coins a person has.
Btw, if you are a US citizen, you can't simply move out of the country to avoid paying taxes. As long as you are a US citizen, you need to file a tax return. You won't owe the same federal taxes (I'm not sure how it changes exactly) but you can't avoid taxes completely that way.
Anyways, better than buying gold is simply to sell your coins on localbitcoins. You'd be surprised on how easy it is. Seriously, you can sell tens of thousands of dollars worth a month there without even trying.
Jump to: