Question about taxes on crypto profits (USA)

zasad@

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Quote from: The Cryptovator on July 14, 2023, 04:27:01 PM

As a taxpayer, it is your responsibility to pay taxes to the government. If anyone other than the government asks you for tax payments, it is likely a scam. Exchanges do not have the authority to deduct taxes directly from you; instead, you are required to submit your tax returns to the government. However, exchanges are obligated to provide reports to the government upon request. Please note that these are general terms, and specific rules may apply in the United States or other jurisdictions.

And in the US, the tax does not give other organizations the function of a tax agent?
In Russia, the income tax on wages at a rate of 13% is withheld by the employer and transfers this data to the tax office along with the payment. This is done so that ordinary citizens do not have problems with the law and they do not pay money to tax lawyers.

The Cryptovator

legendary

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Signature space for rent

As a taxpayer, it is your responsibility to pay taxes to the government. If anyone other than the government asks you for tax payments, it is likely a scam. Exchanges do not have the authority to deduct taxes directly from you; instead, you are required to submit your tax returns to the government. However, exchanges are obligated to provide reports to the government upon request. Please note that these are general terms, and specific rules may apply in the United States or other jurisdictions.

Faisal2202

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Quote from: fridayxiii on July 12, 2023, 04:04:00 PM

Thanks to all for the replies.

My question really boils down this: does an exchange have the power to collect taxes or does that belong to a government only?

More details: when trying to withdrawal some profits from a transaction, the exchange said I must pay them for the capital gains. It sounds shady to me, like a scam, as I thought only the IRS could actually collect taxes.

Thanks again to the community.

Well, many might have answered your query but what i think is exchanges do not cut taxes they only cut their fees because the tax rates are high and i never encountered high cuts on my transaction made via exchanges. And answer to your first query is also no, as exchanges cannot directly collect taxes on behalf of governments.

Quote from: hugeblack on July 14, 2023, 04:18:16 AM

It is better not to rely on articles on tax and legal data and to ask from available government sources or through an accredited lawyer. It is true that they provide good data, but in the end it is better to refer to government sources.

Agreed and noted, but to be honest i do not find lawyers in my region cheap because i tend to avoid them in any case even if i have some severe emergency then i prefer to use only those who are near to my acquaintances. The point is, not everywhere we have the opportunity to ask from lawyers so to get a universal idea of how things should work. Then these articles came handy.

hugeblack

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Quote from: fridayxiii on July 12, 2023, 04:04:00 PM

More details: when trying to withdrawal some profits from a transaction, the exchange said I must pay them for the capital gains. It sounds shady to me, like a scam, as I thought only the IRS could actually collect taxes.

It is only scam. crypto exchange only reports your TAX file to the IRS and does not ask for taxes from you. Can you share with us the link to that exchnage, in addition to reporting it here ----> ReportFraud.ftc.gov

Quote from: Faisal2202 on July 12, 2023, 11:10:25 AM

Because tracking transactions and making them paying taxes is also a difficult task for the authorities. Let me share that article with you here:

How to track and report crypto transactions for tax purposes

It is better not to rely on articles on tax and legal data and to ask from available government sources or through an accredited lawyer. It is true that they provide good data, but in the end it is better to refer to government sources.[/list]

fridayxiii

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Quote from: Potato Chips on July 13, 2023, 08:50:19 AM

Quote from: fridayxiii on July 12, 2023, 04:04:00 PM

Thanks to all for the replies.

My question really boils down this: does an exchange have the power to collect taxes or does that belong to a government only?

More details: when trying to withdrawal some profits from a transaction, the exchange said I must pay them for the capital gains. It sounds shady to me, like a scam, as I thought only the IRS could actually collect taxes.

Thanks again to the community.

SCAM. Anything that asks you to deposit first before you can withdraw is a scam. It simply doesn't make sense when they could just deduct the fee from your balance.

Another thing, exchanges don't collect your taxes, the only ones who do are scammers. It's a common part of a scam scheme actually, for instance pig butchering scam:

Quote from: https://www.finra.org/investors/insights/pig-butchering-scams

The Slaughter

Capitalizing on the relationship they’ve established with you, scammers will point to impressive gains from initial investments and urge you to deposit increasingly larger amounts. Once you do, however, the switch will flip, often leaving you facing devastating losses. The price of a stock that seemed poised to take off might rapidly plummet once the scammer’s market manipulation kicks into high gear. Or the new crypto platform you recently moved your assets into might suddenly become inaccessible.

If you confront the bad actor regarding the losses, they might express empathy and offer to help you recover your money, perhaps attempting to persuade you to invest in another stock. They might cite additional taxes and fees that you must pay before withdrawing your funds, especially if the investment scam involved crypto or other digital assets. And sometimes the bad actor will ghost you once the investment goes south.

Lastly, when trying to withdraw your money off an exchange, you typically only need to pay for the withdrawal fee which should just be couple of bucks. There may be other service charge depending on the platform and the payment method you're using but overall total shouldn't be high - should stay near couple of bucks. And yes, the fee will be deducted on your account balance.

Thanks. Additional research led me to this conclusion, but I wanted -- and got -- the confirmation I was seeking. Appreciate your time.

zasad@

legendary

Activity: 1974

Merit: 4715

Quote from: fridayxiii on July 12, 2023, 04:04:00 PM

Thanks to all for the replies.

My question really boils down this: does an exchange have the power to collect taxes or does that belong to a government only?

More details: when trying to withdrawal some profits from a transaction, the exchange said I must pay them for the capital gains. It sounds shady to me, like a scam, as I thought only the IRS could actually collect taxes.

Thanks again to the community.

In Russia, there is such a practice as a tax agent. The broker keeps the money and pays this money to the tax from each profitable transaction at a rate of 13-15%. But this is only for exchanges, although derivatives or crypto funds may appear there. The trader does not need to worry about this.
In the US, there is a capital gains tax, so you will have to fill out a declaration yourself or hire an accountant. But there are services on large crypto exchanges that help you fill out the declaration automatically. But these exchanges are not tax agents.

Potato Chips

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yesssir! 🫡

Quote from: fridayxiii on July 12, 2023, 04:04:00 PM

Thanks to all for the replies.

My question really boils down this: does an exchange have the power to collect taxes or does that belong to a government only?

More details: when trying to withdrawal some profits from a transaction, the exchange said I must pay them for the capital gains. It sounds shady to me, like a scam, as I thought only the IRS could actually collect taxes.

Thanks again to the community.

SCAM. Anything that asks you to deposit first before you can withdraw is a scam. It simply doesn't make sense when they could just deduct the fee from your balance.

Another thing, exchanges don't collect your taxes, the only ones who do are scammers. It's a common part of a scam scheme actually, for instance pig butchering scam:

Quote from: https://www.finra.org/investors/insights/pig-butchering-scams

The Slaughter

Capitalizing on the relationship they’ve established with you, scammers will point to impressive gains from initial investments and urge you to deposit increasingly larger amounts. Once you do, however, the switch will flip, often leaving you facing devastating losses. The price of a stock that seemed poised to take off might rapidly plummet once the scammer’s market manipulation kicks into high gear. Or the new crypto platform you recently moved your assets into might suddenly become inaccessible.

If you confront the bad actor regarding the losses, they might express empathy and offer to help you recover your money, perhaps attempting to persuade you to invest in another stock. They might cite additional taxes and fees that you must pay before withdrawing your funds, especially if the investment scam involved crypto or other digital assets. And sometimes the bad actor will ghost you once the investment goes south.

Lastly, when trying to withdraw your money off an exchange, you typically only need to pay for the withdrawal fee which should just be couple of bucks. There may be other service charge depending on the platform and the payment method you're using but overall total shouldn't be high - should stay near couple of bucks. And yes, the fee will be deducted on your account balance.

fridayxiii

newbie

Activity: 3

Merit: 4

Thanks to all for the replies.

My question really boils down this: does an exchange have the power to collect taxes or does that belong to a government only?

More details: when trying to withdrawal some profits from a transaction, the exchange said I must pay them for the capital gains. It sounds shady to me, like a scam, as I thought only the IRS could actually collect taxes.

Thanks again to the community.

Faisal2202

hero member

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Merit: 513

Payment Gateway Allows Recurring Payments

Dear op, i am not a US citizen but few days back i read an article related to the same query of yours. In which they taught how to pay taxes and on which thing (token, NFTs and security) you have to pay how much taxes. And how you have to register with IRS to pay taxes. Because tracking transactions and making them paying taxes is also a difficult task for the authorities. Let me share that article with you here:

How to track and report crypto transactions for tax purposes

At that time, i just gave it a mere glance because i knew this article is of no use to me as i am not a US citizen and in my region i have to pay no Taxes as our government has not implied any.

hugeblack

legendary

Activity: 2702

Merit: 4002

First, you should not ask for tax advice in a multinational forum, ask a specialized expert or a lawyer, as failure to accurately report may expose you to a legal issue. Taxes are applied to Bitcoin and all cryptocurrencies according to ---> https://www.irs.gov/pub/irs-drop/n-14-21.pdf and there is a page for frequently asked questions ---> https://www.irs.gov/individuals/international-taxpayers/frequently-asked-questions-on-virtual-currency-transactions.

In short, every sale that made a gain is taxable and there are no taxes as long as you don't sell.

You can read some user experiences ----> https://www.reddit.com/r/bitcointaxes/

zasad@

legendary

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Quote from: fridayxiii on July 12, 2023, 08:53:47 AM

I need some help to verify or confirm when and who collects taxes on profits made from trades or transactions of crypto currency.

I'm very new to crypto and made some transactions that returned a profit. It was my presupposition that the platform where the transaction took place would report this to the IRS, but as the individual, I have responsibility to report this on my taxes when filing next year.

Is this accurate? Any information on who collects taxes (and how) for US residents on crypto is much appreciated.

I know that in the USA there are licensed accountants who, under the contract, will make you tax returns. It is better to start with the help of professionals and study the articles of laws on your own in order to understand the numbers in the reports. A licensed accountant is liable for errors in tax reporting. Subsequent declarations can already be submitted independently if the services of an accountant are expensive for you.

_act_

legendary

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Lightning network is good with small amount of BTC

I like people to be good citizens.

To know about crypto tax: https://koinly.io/cryptocurrency-taxes/?
To know about how to pay your tax: https://coinledger.io/blog/how-to-report-cryptocurrency-on-taxes

If you read the second guide very well, you will know about what to do to pay your crypto tax. But read the first link very well too to know all about crypto tax in United States.

OmegaStarScream

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I'm not from the U.S and I'm not sure which platform you're using (assuming that things could be different depending on which exchange you're using) but take a look at these articles from Coinbase[1][2]. they should give you a good idea of everything you want to know (taxable events, the forms to fill out, etc.)

[1] https://www.coinbase.com/learn/your-crypto/tax-documents-explained
[2] https://www.coinbase.com/learn/crypto-basics/understanding-crypto-taxes

fridayxiii

newbie

Activity: 3

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I need some help to verify or confirm when and who collects taxes on profits made from trades or transactions of crypto currency.

I'm very new to crypto and made some transactions that returned a profit. It was my presupposition that the platform where the transaction took place would report this to the IRS, but as the individual, I have responsibility to report this on my taxes when filing next year.

Is this accurate? Any information on who collects taxes (and how) for US residents on crypto is much appreciated.

Topic: Question about taxes on crypto profits (USA) (Read 190 times)