If you sell bitcoin to buy fiat and turn a fiat profit doing so, then in many jurisdictions this is called a capital gain and may be considered taxable. The State might not actually force you to pay any tax on this gain, though, since it depends on the jurisdiction in question, the amount of the fiat gain, the duration of the original investment, and so on. There is no simple black and white answer.
Those hell bent on evading taxes (morally, I have no qualm with them) won't be asking these questions, since they will do everything they can not to pay, and that doesn't really have much to do with bitcoin. If the State calls something tax evasion, that applies whether bitcoin is involved or not.
Topic: Bitcoin taxes (Read 1989 times)
Just as a joke: ain't nobody got time for that sh** 
i'm too poor to pay taxes. 
Beware the tax man! He's coming for you! 
There are two types of taxes you need to worry about with Bitcoin.
The first is regular income tax. If you earn bitcoins by mining or doing any other kind of work, you must declare the market value of your bitcoins as earned income whether you sell them or not.
The first is regular income tax. If you earn bitcoins by mining or doing any other kind of work, you must declare the market value of your bitcoins as earned income whether you sell them or not.
So you are telling that if i draw a great painting, i must decrale its market value as earned income, whether i sell it or not?
When mining with a large mining pool, I agree, the bitcoins you receive are a payment for services rendered (selling hashing power). The pool operator is the payee. These coins should be treated as income, probably valued at the time of payment.
However, when solo (or p2pool) mining, the story changes. There is no payee, there is simply a computer program (and network). There is no payment, you create the bitcoins (out of thin air) when you solve the next block. Any tax responsibility should be similar to taxes you would owe if you bought some tools (hashing machines) and used them to build something (bitcoins), probably valued at the time you sell or exchange them, although they could be considered inventory (which might be taxed).
Disclaimer: I am not a CA.
Well, bitcoins mined have a fair market value at the time received. If there is a difference between that value, and the value you sell or exchange them for, pretty sure that is capital gains.
As others said, always good to seek the advice of a real attorney (which I, and presumably we, are not).
no tax !
While advice from forum members may offer insight, you should probably consult an experienced tax attorney. At least in my local area, most attorneys will answer brief questions for free. If not, you can always visit Avvo and see what the lawyers there believe. I asked my attorney something similar some time ago and was surprised at the answer.
That is good advice. I would add that even a tax lawyer may respond to your question with "WTF are you talking about?" This is all new stuff. But whatever shakes out, you are going to owe some taxes if you sold bitcoins at a profit. 
While advice from forum members may offer insight, you should probably consult an experienced tax attorney. At least in my local area, most attorneys will answer brief questions for free. If not, you can always visit Avvo and see what the lawyers there believe. I asked my attorney something similar some time ago and was surprised at the answer.
Lol
because the opinions in this thread are terribly wrong, at least from my Canadian point of view.
You just painted with a pretty broad stroke there. I am a financial professional by day.
Ok, explain to me how you bypass both capital gains taxes and currency transaction taxes.
Are you getting richer via your action? Yeah, there's a tax waiting for you.
As far as I know, you don't have to pay... It's best of you ask a tax consultant....
because the opinions in this thread are terribly wrong, at least from my Canadian point of view.
You just painted with a pretty broad stroke there. I am a financial professional by day.
You guys should really consider talking to a fiscalist or a tax accountant, because the opinions in this thread are terribly wrong, at least from my Canadian point of view.
tl;dr as long as you sit on them nothing much happens, but the second you make a gain from cashing out or otherwise exchanging them you are liable.
tl;dr as long as you sit on them nothing much happens, but the second you make a gain from cashing out or otherwise exchanging them you are liable.
As others in this thread have mentioned, it's unlikely that you MUST pay taxes on income from BTC, however, you might think about the positive implications such a practice has.
Several national governments are just beginning to examine BTC policy. Of course, taxing BTC (or ensuring that it is taxed if already applicable) is going to be one of their primary concerns.
If you are running a legally recognized business, it would probably be prudent of you to pay taxes on BTC-related profit if only to show that BTC is not a threat to your local government's tax policies and revenues.
Of course, a not-insignificant portion of the BTC community identifies as libertarian or even anarchist and they will probably flame me for this post.
Several national governments are just beginning to examine BTC policy. Of course, taxing BTC (or ensuring that it is taxed if already applicable) is going to be one of their primary concerns.
If you are running a legally recognized business, it would probably be prudent of you to pay taxes on BTC-related profit if only to show that BTC is not a threat to your local government's tax policies and revenues.
Of course, a not-insignificant portion of the BTC community identifies as libertarian or even anarchist and they will probably flame me for this post.
Depends where you live, but best believe, most jurisdictions want to get their cut. Here in the US, bitcoin gains on trading for instance, would fall generally under capital gains, and more specifically may fall under "foreign currency gains." If not a currency, then we're actually worse off, if you read the tax code.
Taxman!
The best and most inexpensive way I see Bitcoin and taxes getting along is if a flat tax rate is introduced; no more taxing your income, expenses, and existence, just a simple yearly bill.
The best and most inexpensive way I see Bitcoin and taxes getting along is if a flat tax rate is introduced; no more taxing your income, expenses, and existence, just a simple yearly bill.
Reducing taxes will do a good job at reducing the size of gov though
No taxes. The government does no control it.
Taxes have nothing to do with control. In the US, your stance could get you arrested for tax evasion.
No taxes. The government does no control it.
Taxes have nothing to do with control. In the US, your stance could get you arrested for tax evasion.
No taxes. The government does no control it.
Jump to: