Seek an accountant. There's various tools online where you can calculate capital gains, and income tax together, but honestly just get an accountant to do the math for you as they are less likely to make mistakes. Any advice on here would be greatly inaccurate because each jurisdiction has different tax laws. For example, some countries have tax brackets which allow you to earn a certain amount before having to declare income tax. So, its just better to seek professional advice from an accountant in your jurisdiction.
Tax can be extremely complicated, and that's just with fiat. When you add into the equation the different laws on cryptocurrencies then its becomes even more difficult. There's also a lot of misinformation on the internet regarding tax, and a lot of users probably think they don't need to file tax at all until they've converted it into fiat, and I do believe this was the case for a long time, but a lot of countries are now treating it as money, and therefore its subject to income/capital gain tax.
Topic: How do you pay tax on this one? (Read 164 times)
Hi,
Here is the scenario:
Fiat version
A does $1,000 worth of work for B.
B pays A $1,000.
B registers the $1000 as loss.
A pays income tax on the $1,000.
Btc version
A does $1,000 worth of work for B.
A goes to altcoins market and buys for $1 in fiat 1,000,000 $hitcoin (pick any dead coin you want).
B has no crypto so he goes to exchnage X and buys via credit card $1,000 worth of Bitcoin BTC (say 0.1BTC for example)
Exchange X automatically reports to the IRS that B has aquired so 0.1BTC for $1,000.
B makes the conscious decision to exchange the 0.1 BTC with A because B believes that:
A does not declare anything to the IRS because his BTC is not going back via fiat.
Your educated crrections / comments / teachings / education / clarifications are highly appreciated.
Here is the scenario:
Fiat version
A does $1,000 worth of work for B.
B pays A $1,000.
B registers the $1000 as loss.
A pays income tax on the $1,000.
Btc version
A does $1,000 worth of work for B.
A goes to altcoins market and buys for $1 in fiat 1,000,000 $hitcoin (pick any dead coin you want).
B has no crypto so he goes to exchnage X and buys via credit card $1,000 worth of Bitcoin BTC (say 0.1BTC for example)
Exchange X automatically reports to the IRS that B has aquired so 0.1BTC for $1,000.
B makes the conscious decision to exchange the 0.1 BTC with A because B believes that:
- If he pays A $1,000 in fiat, then that money is really gone for good.
- If, in return, he gets 1,000,000 $hitcoins, who knows, one day, to da moon.
- B can declare to the IRS that the $1,000 he used to buy the 0.1BTC was investment monmey received then reinvested in crypto within 6 months; or B can liquidate the $shitcoins and declare the same loss he would have under the Fiat scenario.
A does not declare anything to the IRS because his BTC is not going back via fiat.
Your educated crrections / comments / teachings / education / clarifications are highly appreciated.
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