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Cryptomiles1

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Quote from: BoofBitcoin on October 26, 2019, 12:48:46 AM

Very specifically this has to do with tax brackets. I find myself in the $0 to $39,375 dollar range for income. According to the tax brackets for this, that means I pay 0% in capital gains if I decide to take some bitcoin out. Is that correct? Additionally, if I take out say, $50,000 does what I take out of bitcoin count as income and have an effect on my capital gains tax bracket status?

if I may say the tax is dependent to some particular countries, mostly my country NGN, the rate with mine is defers compared to US or other country.
our tax rate is very low. e.g, for annual Income tax in Nigeria is levied at a progressive rates capped at 24%. This are the applicable rates for personal income tax in Nigeria :
First 400,000: personal income tax rate of 7%
Next 700,000: personal income tax rate of 11%
Next 900,000: personal income tax rate of 15%
Next 1,000,000: personal income tax rate of 19%
Next 2,600,000: personal income tax rate of 21%
Above 4,200,000: personal income tax rate of 24%

GSpgh

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Quote from: OgNasty on October 27, 2019, 10:49:28 PM

This is very true. While the US has some favorable capital gains tax rates, citizens in places like Canada, where 50% of the value of any capital gains are taxable, have to pay taxes on virtually every profitable Bitcoin sale no matter how small.

This means half the regular tax rate and there is no difference between short term and long term gains so it's generally more favorable for short term gains than in the US, which taxes short term gains at full rate. Long term gains are more complicated, if I remember well the long term rate can end up lower in Canada in income ranges somewhere between 40000 and 200000 and above 500000 due to differences in tax brackets. Provincial tax rates are often higher than state taxes tho... so the overall difference can vary slightly depending on where you live.

In the US people have to pay taxes on every gain too unless they're in the 0% bracket so not much difference here. Even at 0% they still need to file the 8949 and do the math just to show that they don't owe taxes.

OgNasty

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Quote from: Immakillya on October 26, 2019, 01:08:33 AM

I think every country have different tax rates on capital gains.

This is very true. While the US has some favorable capital gains tax rates, citizens in places like Canada, where 50% of the value of any capital gains are taxable, have to pay taxes on virtually every profitable Bitcoin sale no matter how small.

squatter

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STOP SNITCHIN'

Quote from: ?? on ??

So if I bought bitcoin today, and by some unfortunate event had no further income of any sort for the next year and decided to sell at a profit, my tax rate would be 0%.

To get the 0% rate, you can't sell the bitcoins until after October 27, 2020, one full year. And your total 2020 income (including capital gains) would need to be $39,375 or less.

Quote from: ?? on ??

If I sold half way through the year it would be an ordinary minimum rate.

Correct, your ordinary tax rate.

If you make $30K income this year, that puts you in the 12% tax bracket, so your short-term gains would be taxed at 12%.

Quote from: Jet Cash on October 27, 2019, 04:50:26 AM

The whole situation is extremely complex, and you need to talk to an accountant.

It depends how often you trade. If you only have a handful of trades to report each year, it's pretty straightforward. The discussion makes it sound more complicated than the tax forms really are.

Jet Cash

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The whole situation is extremely complex, and you need to talk to an accountant. It depends on your status - are you a trader or an investor, the way your government regards Bitcoin - is it a currency for example, and the way you dispose of your Bitcoin - did you use it to buy a car.

In the UK, holding legal tender is tax exempt. A gold Britannia is legal tender, so its increase in value in step with gold does not give rise to a tax liability. It isn't too clear how Bitcoin is rated, but profits on trading through an exchange, will probably give rise to an income tax liability.

GSpgh

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Quote from: ?? on ??

I do have the transaction history if I dig through those addresses on the blockchain though so it just depends on what would pass as qualifying paperwork for the IRS. I was worried that the recent changes to some of the crypto tax regulations would effect this but it does not seem to so that's good.

For the tax return you self-declare sale transactions - quantity, sale price, cost basis - see form 8949: https://www.irs.gov/pub/irs-pdf/f8949.pdf

So technically you don't need submit additional paperwork during filing time, just make sure your numbers are accurate tho you'll need proof if you get audited... again talk to a professional about details. For example I've been told by a CPA that IRS auditors at their discretion can accept cost basis proof "reconstructed from alternative sources", which I think means if you have a blockchain tx, a corresponding bank transfer, and historic BTC price at that time - it might be enough.

By the way coinbase has reported everyone to IRS, including closed accounts, so i'd say you should contact coinbase and request them to give you what they gave to IRS about your account(s).

squatter

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Quote from: ?? on ??

So just to be clear both capital gains and income can determine which bracket I fall into? Additionally would these be gains that are realized?

Capital gains are counted as income. On your tax return, they go on a different line than your wages from a job, but it's taxable income just the same. Your tax bracket is determined by the sum of all forms of taxable income -- wages, unemployment income, gambling winnings, capital gains, etc.

Only realized gains are taxable. Until then, they are just "paper" gains or losses and no taxable transaction has occurred. If you buy 10 bitcoins and sell 5 of them, you are only liable for taxes on the 5 you sold.

Quote from: Bttzed03 on October 26, 2019, 01:29:20 AM

If your capital gains ranges from $0 to $39,375, your capital gains tax (CGT) is zero

This is incorrect. If your total income -- including capital gains -- is in that range, the long-term capital gains tax rate is 0%.

Long-term capital gains only applies to positions held for more than a year. If you bought and sold in the same tax year, all gains are taxed at your ordinary tax rate -- meaning if you're in the 37% bracket, you owe 37% on short term gains.

mersal

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Quote from: ?? on ??

Quote from: Bttzed03 on October 26, 2019, 01:29:20 AM

If your capital gains ranges from $0 to $39,375, your capital gains tax (CGT) is zero
If your capital gains ranges from $39,376 to $434,550, you will be taxed 15% of your gains.
If you gained the $50K worth of btc, your CGT is $7,500
I got the the brackets and rates at https://thecollegeinvestor.com/23577/capital-gains-tax-brackets/

You have to compute how much your capital gains.
You may also find this useful https://www.cryptotrader.tax/blog/how-to-calculate-your-bitcoin-taxes-the-complete-guide

Ok that helps. So just to be clear both capital gains and income can determine which bracket I fall into? Additionally would these be gains that are realized? So if I have say 100k worth of bitcoin, but only take out 20k worth are my gains based on the total amount of bitcoin I have, or is it just on taxable events?

I guess you can provide source of that bitcoin and how much it costed you while buying it will be taken into an account while filing taxes but the accountant from your country may know it better than anyone here because taxation laws changes from country to country.I just have to pay the income tax when it reaches certain limit,no capital gain taxes needed for that,anyway its so confusing for a common mind. Roll Eyes

GSpgh

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Quote from: ?? on ??

Ok that helps. So just to be clear both capital gains and income can determine which bracket I fall into? Additionally would these be gains that are realized? So if I have say 100k worth of bitcoin, but only take out 20k worth are my gains based on the total amount of bitcoin I have, or is it just on taxable events?

First, talk to an accountant. Second, yes, to the best of my knowledge only realized gains are taxed. If you sell $20k you pay 15% on the gains you realized from the $20k. For example if you aquired those bitcoins for $12k, you realized a $8k gain, so you'd pay $1200 in taxes. The neat thing is that you can pick and choose "which" bitcoins you're selling. So if you bought some very expensive ones you can say that you sold those and pay less in taxes now (but possible more later).

Bttzed03

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If your capital gains ranges from $0 to $39,375, your capital gains tax (CGT) is zero
If your capital gains ranges from $39,376 to $434,550, you will be taxed 15% of your gains.
If you gained the $50K worth of btc, your CGT is $7,500
I got the the brackets and rates at https://thecollegeinvestor.com/23577/capital-gains-tax-brackets/

You have to compute how much your capital gains.
You may also find this useful https://www.cryptotrader.tax/blog/how-to-calculate-your-bitcoin-taxes-the-complete-guide

Immakillya

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Quote from: BoofBitcoin on October 26, 2019, 12:48:46 AM

Very specifically this has to do with tax brackets. I find myself in the $0 to $39,375 dollar range for income. According to the tax brackets for this, that means I pay 0% in capital gains if I decide to take some bitcoin out. Is that correct? Additionally, if I take out say, $50,000 does what I take out of bitcoin count as income and have an effect on my capital gains tax bracket status?

That depends on bracket on tax on capital gains. I think every country have different tax rates on capital gains. In my country (Philippines), if you gain Php 2,000,000.00 or above or $40k above. You're on bracket 5 which is automatic Php 490,000.00 + 32% of excess over Php 2,000,000.00. That's how they calculate the tax on capital gains. That's I think for domestic.

BoofBitcoin

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