Topic: Paying TAX - page 2. (Read 5240 times)

FIFY

Well I am not being taxed, as IRS does not records when I bought it at MtGox, lol.

Bullshit.  In the US any Bitcoins you receive from mining are considered ordinary income.  So your statement is totally false.

I have paid all the taxes required on my Bitcoin mining and Bitcoin trading.  For mining you must claim the value of the Bitcoins you mined on the day you mined them.  The way I did this was to use the average price on that day as the value.  So if I mined 1 Bitcoin on a day when the average value was $10 then I have $10 in ordinary income on that day.  You do this for all Bitcoins mined and the sum is the amount of income you have and then you calculate your tax from there.  Of course you can deduct the cost of the mining equipment, electricity, etc. since you are running a mining "business".  So if the amount you spent making your coins exceeds the amount they were worth you have a loss and this loss can be taken against your income.

Nope.  On the day you mined the coin you had $500 dollars in ordinary income.  This $500 is also the cost basis for the coin.  If you sell it for $15 one year later you have a long term capital loss of $500 - $15 = $485 and you can deduct this long term loss against all your other long term gains.  If you hold it for less than a year then you have a short term capital loss of $485 and you can deduct this loss against your other short term gains.

Yes, the ordinary income from mining happens on the day you mine it.  If you don't have a lot you can wait till the end of the year and report all your income from mining on your form and pay the tax at that time.  However, if you are making a LOT of profit (income minus all your expenses) then you will have to make estimated payments throughout the year or face a penalty for not paying your taxes on time.

The amount you make from mining is ordinary income, not capital gains.  You can deduct the cost of equipment, electricity, etc. against your ordinary income.  All of this needs to be done on a schedule C - not E.

If, after mining the coins and correctly reporting their value on the day you mine them and determining the cost basis for the coins, you sell them then you have a capital gain or loss and the capital gain or loss is reported on schedule E.

Dream on.

People work hard and earn money which ideally they would like to retain for themselves. However, a significant portion of this usually has to be given to the state. In my view, it is right that people pay their fair share of taxes.

Money is everything in today’s livelihoods. This is because money is used to buy all the necessities such as food, water, and shelter. Money is also used to help a family’s children in the form of school fees and other activities. In addition to this, people do not only need money to cater for their necessities, but also for future investments. The more that people have to invest, the more they believe they can accumulate in the long term. As a result, many are reluctant to lose some of their income through the deduction of tax.

Nevertheless, citizens should be obliged to pay taxes to the government for a number of reasons. They should accept that the taxes they pay help the government offer them the public services all over the country. These public services are things such as the construction of roads, bridges, public hospitals, parks and other public services. The same tax money helps the country’s economy to be stable. Through taxes, the government can pay off its debts. In short, tax money is a way of ensuring that people have comfortable livelihoods.

In conclusion, even though many people think that they should not pay taxes, that money is useful to the stability of any country. Therefore, people should not avoid paying taxes as it may affect the country’s economy and services that it provides.

In fact, there is no problem for some tax-free countries, but it will certainly be a problem for some countries that charge a hefty sum of money. As a result, million dollars can be transferred from country to country without any registration.

Filing capital gains may protect you from future prosecution, for hiding your income. The state may be evil, but we all have to play by the current rules or be ready to face the consequences.

In our country doesn't have a law regarding taxation on bitcoin. Maybe depends on the state or country because other country already legalized bitcoin. And our country is not one of them but we're open in transactions even in days.

During a discussion about trying to have favorable tax situations with cryptos a friend once said, "Don't do it, that's like inviting the Devil into your home, there's no good reason to do it if it's not already happening"

I highly recommend against filing capitol gains tax. For what reason is it wise to inject crypto mining with the state? They shouldn't be allowed in it, but if everyone lets them in then they'll think it's all ok until a Supreme Court case goes to show they have no right (it's only a matter of time).

It's probably in the country you live bitcoin not in legal.
In some countries bitcoin has been legal
And I think there is no harm in paying taxes for the welfare of the country itself.

Didnt the government not recognice bitcoin as currency? Wouldnt paying taxes for bitcoin be the same as paying taxes for monopoly money?

To clear this discussion up, we need someone to chime in who has gone through the rigamarole of doing taxes on  Cryptomining.
Paying the taxes on bitcoin you mined on XYZ date makes no sense whatsoever.

Say for instance, you mined a 1 Altcoin on 7/11/16  at a price of $500 .  A month later the price of the altcoin crashes to   $15 dollars amd doesnt recover for the  foreseeable future. The value of the alt-coin is only realized once the altcoin is converted to  Fiat or used to purchase a good. Technically the Alt-coin is a useless abstract currency until this occurs.

So the IRS expects us to pay the taxes on a mined alt-coin, before we ever realize its true worth?  This makes no sense, but, if that is the case, then miners should immediately cash  out whatever they earned, then re-convert whatever fiat  they want to re-invest in the particular coin. This would make it much easier for the miner to organize their particular taxes.

A friend of a friend recently purchased multiple  Asic miners and   he told me hes going to mine, hold, and whenever he cashes out present the earnings as capital gains. He will  put down the value of the equipment used in column E on his  Schedule D 1040 form.  I view this all as straight capital gains.  I feel thats the best thing for us miners to do, even if the  IRS balks, your not going to  jail and maybe have to pay a small fine due to the fact that this is a new field, for us and for the IRS.

Another thing that may work is, mine, hold, and hope that  your countries economy becomes like Japans, in Japan you can use Bitcoin  as a taxless currency  for goods, rent, property, cars and food.   I foresee this happening after the price  of a bitcoin starts to stabilize around 100K, which should occur toward the middle of the 2020's

     Using Bitcoin in Japan: https://youtu.be/xrauYRGDCjY

Conceptually you "gained property" as far as the USA is concerned. You pay tax when your property gains value. They're asking you to pay value on nothing becoming something. 

IMO I think it's entirely wrong to pay taxes on that. I wouldn't. Bitcoins are out of the purview of the state no matter what they like to claim. Fact is you paid tax on everything that allowed you to mine that Bitcoin.

If a furniture maker pays taxes on his woodshop, wood, brushes, oils, etc... and makes a chair, does he pay taxes on the value of that chair coming into existence? No. Lawfully he "would pay tax" but he doesn't. No one does that. They pay sales tax when they sell it, or pay higher property taxes to compensate. If they are listed as a commercial entity they pay extra taxes like for electricity etc.

Think of it like this, they're acting as if Bitcoins fell into your lap like your pop passed away and left them to you. They want to tax on that. What they're ignoring is POW (proof of work) in which you paid plenty of tax already and have "labored" it into existence. So their argument is really faulty.

How and why are they able to say this crap? Because no one has challenged them yet. Why haven't they enforced it? Because then they wouldn't have any volunteers since it has some shit chances of holding up in court.

Paying taxes is not that bad at all, if that country has good government and no corrupt officials.
When our government implement taxes on my earned bitcoin I will warmly abide by it.
For we do have great leader at this moment. If the taxes will help your country to improved why not.

It is pretty easy to avoid tax on income mining and trading etc) if you really wanted to. Its far harder to avoid coming to the tax authorities notice when you want to cash out into Fiat. Difficult to explain where all that extra money came from.  Especially as the tax authorities have the perfect record of transactions (the block chain).  I don't think tax authorities are there yet but as crypto increases in value, they will take more and more notice.

I believe that you are a good citizen of the land then. Maybe your country is really strict in the implementation of its tax laws and for people to avoid the inconvenience of being tag as tax evader then they just follow the law so there would be less headaches.

Here in my country, we can still get away from being taxed on our Bitcoin income and transactions. Most of the people involved in freelancing projects online are not paying the government any tax. Maybe because the government is not really serious in running after tax evaders and they just wait for anybody to declare his/her income.

If you are being taxed then pay that taxes with your rabbitcoins 

If I bought some BTCs many years ago, I will need to report only at the time when I sell, right? I am in US.

If tax authority targets you, it's a high chance that you can get caught. It's not too difficult to trace bitcoins if you have any transactions related to third parties that require you to provide any personal info (Delivery address, bank account or ID...)

In my vision cryptocurrency is a uniek piec of freeware open source software. If you hold cryptocurrency then its like holding software. We do not pay for opensource freeware software. If you mine cryptocurrency in the decentralized community with your hardware then it is still your software. Not taxable in any kind if so then sue me if i make a wooden chair of my own wood and holding that chair.

If i sell that chair then its income and can undedstand taxation. Then taxes should be executed by the country where the individual lives. Al other approches i do not understand and are based on misinterpertation in my vision.

You're wrong. You have to pay tax from trading stocks, and these are not a currency. This is just an example, but most countries require you to pay income taxes and trading brings you income. The profits can be hidden as long as you hold your coins, but someday you'll want to buy a car or a house and then it will all be revealed.


They can if they want. At the moment I haven't heard of such cases, because connecting the mined coins with taxpayers is almost impossible, as long as they don't convert to fiat. They'd have to check each miner in a pool to see which of them send money to exchanges, then pick those who used local exchanges, the ones that can be easily forced to disclose information, and then send them subpoenas. Then they'd have to go through the history of each of these accounts to see how much money they wired and compare with their tax reports.