Topic: Some info on Crypto taxes and capital gains (Read 249 times)
Soon Bitcoin will be so regulated that it will become fiat
but here we are being taxed with the alternative we had so we can avoid the taxes. (I'm actually being honest with this)
My assumption is if you are using cryptocurrency on your daily basis and as your primary transactions method, that is the time you might need to check the topic regarding tax and capital gains. But if you are using cryptocurrency with a harmless amount of assets, you can definitely ignore it.
Just my two sats.
My assumption is if you are using cryptocurrency on your daily basis and as your primary transactions method, that is the time you might need to check the topic regarding tax and capital gains. But if you are using cryptocurrency with a harmless amount of assets, you can definitely ignore it.
Just my two sats.
I think you don't ignore things because you are not really into it. You can also understand it and help to follow rules. If bitcoin is taxable in the country, no need to avoid it because tax evasion is a crime no matter how small it is.
+1 for cointracker.io. The site will help you generate the needed Schedule One (Additional Income and Adjustments to Income) as well as a form 8949 and Schedule D (Capital Gains and Losses). Also, make sure to report the Capital Gains/Losses in question 6 on the form 1040. On the 8949, you need to put a check in the box next to option (C) Short-term transactions not reported to you on Form 1099-B (unless of course it was a large enouph transaction to be reported by the exchange and they sent you a 1099)
Hi all,
I am looking forward fore becoming a Crypto taxation expert (feeling this specialty has a bright future) and this article really speaks itself all in
one information regarding crypto taxations:
https://cryptoindetail.com/cryptocurrency/cryptocurrency-taxes/
I would really love to hear more thoughts regarding this topic.
I am looking forward fore becoming a Crypto taxation expert (feeling this specialty has a bright future) and this article really speaks itself all in
one information regarding crypto taxations:
https://cryptoindetail.com/cryptocurrency/cryptocurrency-taxes/
I would really love to hear more thoughts regarding this topic.
IMO, The reason why crypto people do not understand the tax and capital gains of Bitcoin is that in the first place they went business to Bitcoin to avoid it. They were able to do so, but here we are being taxed with the alternative we had so we can avoid the taxes. (I'm actually being honest with this)
My assumption is if you are using cryptocurrency on your daily basis and as your primary transactions method, that is the time you might need to check the topic regarding tax and capital gains. But if you are using cryptocurrency with a harmless amount of assets, you can definitely ignore it.
My assumption is if you are using cryptocurrency on your daily basis and as your primary transactions method, that is the time you might need to check the topic regarding tax and capital gains. But if you are using cryptocurrency with a harmless amount of assets, you can definitely ignore it.
It's on you to check whether you can operate in relative impunity or whether you're crapping all over your local rules. They're not going to care that you didn't realise.
Some places operating in ignorance is fine. In others you could be building up a whole load of future pain without realising.
Can't put it any better than this. I would say that "ignoring" is not a real option that is available to us. I am residing in Singapore, and here the tax authorities are very strict with the liabilities. I can't make statements for the other jurisdictions, but I really doubt whether the situation is much different than what we have here. For moderate amounts, you can "ignore" the tax liability, but in the end everything depends on your luck. You may get away with it, or you may get caught. If you are unlucky, then the punishment may not be limited to a simple monetary fine.
For the UK it's mainly stocks and forex that are treated as capital gains. Cars and real estate are exempt and come under their own thing entirely (much like how dividends are treated afaik).
Forex for me includes anything like gold, crypto and actual currency trades, could probably call them commodities contracts.
Yeah I wouldn't care to calculate how much the difference is when I earn something in crypto and buy something (I don't have to declare it anyway since it'll definitely be less than the £1000 threshold here).
A lot of the time if you file something wrong, you'll normally just get a fine to the tune of that amount to pay but fines add up and interest is added too.
Forex for me includes anything like gold, crypto and actual currency trades, could probably call them commodities contracts.
It's on you to check whether you can operate in relative impunity or whether you're crapping all over your local rules. They're not going to care that you didn't realise.
Some places operating in ignorance is fine. In others you could be building up a whole load of future pain without realising.
Some places operating in ignorance is fine. In others you could be building up a whole load of future pain without realising.
Yeah I wouldn't care to calculate how much the difference is when I earn something in crypto and buy something (I don't have to declare it anyway since it'll definitely be less than the £1000 threshold here).
A lot of the time if you file something wrong, you'll normally just get a fine to the tune of that amount to pay but fines add up and interest is added too.
IMO, The reason why crypto people do not understand the tax and capital gains of Bitcoin is that in the first place they went business to Bitcoin to avoid it. They were able to do so, but here we are being taxed with the alternative we had so we can avoid the taxes. (I'm actually being honest with this)
My assumption is if you are using cryptocurrency on your daily basis and as your primary transactions method, that is the time you might need to check the topic regarding tax and capital gains. But if you are using cryptocurrency with a harmless amount of assets, you can definitely ignore it.
My assumption is if you are using cryptocurrency on your daily basis and as your primary transactions method, that is the time you might need to check the topic regarding tax and capital gains. But if you are using cryptocurrency with a harmless amount of assets, you can definitely ignore it.
It's on you to check whether you can operate in relative impunity or whether you're crapping all over your local rules. They're not going to care that you didn't realise.
Some places operating in ignorance is fine. In others you could be building up a whole load of future pain without realising.
IMO, The reason why crypto people do not understand the tax and capital gains of Bitcoin is that in the first place they went business to Bitcoin to avoid it. They were able to do so, but here we are being taxed with the alternative we had so we can avoid the taxes. (I'm actually being honest with this)
My assumption is if you are using cryptocurrency on your daily basis and as your primary transactions method, that is the time you might need to check the topic regarding tax and capital gains. But if you are using cryptocurrency with a harmless amount of assets, you can definitely ignore it.
Just my two sats.
My assumption is if you are using cryptocurrency on your daily basis and as your primary transactions method, that is the time you might need to check the topic regarding tax and capital gains. But if you are using cryptocurrency with a harmless amount of assets, you can definitely ignore it.
Just my two sats.
I am not an expert on anything related to tax matters, and I am just an ordinary taxpayer myself so indeed it is good to be educated with the laws extant for us to follow and learn the many ways we can use to minimize our legal obligations to the government. Though, of course, it is always advisable to be consulting a professional on this matter, learning the rope on the matter can be helping a lot. Maybe I am just lucky that here in my country we are still at the liberty to declare our cryptocurrency income generating activities or not. In countries, where tax laws are implemented to the letter, one must always be careful and at the same time exhaust all legal means anyone has the privilege to use.
I made some posts in the politics and society section regarding crypto taxes and capital gains. I still think that in the Crypto community people don't understand these taxes, and it would be great to teach people as much as we can to ensure that they're not screwed by the tax man when they just didn't take sometime to learn. Here are my quotes from some recent discussion in the P&S section.
Note: I'll be making this self mod to remove low effort sig spam. I am not going to be removing anything past that.
I don't think you guys understand how capital gains taxes work. This isn't new, and this isn't something which is just present in the crypto world. Every single market where trading occurs - Stocks, Bonds, Real Estate, Commodities, Forex, etc are all subject to capital gains taxes.
If you buy something at 100 and sell it at 1000 within a few weeks, then you're going to be subject to short term capital gains.
If you buy something at 100 and sell it at 1000 after a year of holding it, then you're going to be subject to long term capital gains.
Short term is going to be the most expensive, tax wise, of these two. These capital gains are also reliant on your income bracket.
But to address your question, as it revolves around 'what if I lose money, does the government pay me' Well kinda.
If you buy something and then sell it as a loss, you're able to 'take a loss' on your tax return and use the loss to lower your income for the year (you can only take a loss of 3000 per year on your return, so if need be you'll continue to carry forward your loss until you've exhausted it) So yes, the government does in a way compensate you for your losses.
Don't think that capital gains is just present in crypto. This is present everywhere.
If you buy something at 100 and sell it at 1000 within a few weeks, then you're going to be subject to short term capital gains.
If you buy something at 100 and sell it at 1000 after a year of holding it, then you're going to be subject to long term capital gains.
Short term is going to be the most expensive, tax wise, of these two. These capital gains are also reliant on your income bracket.
But to address your question, as it revolves around 'what if I lose money, does the government pay me' Well kinda.
If you buy something and then sell it as a loss, you're able to 'take a loss' on your tax return and use the loss to lower your income for the year (you can only take a loss of 3000 per year on your return, so if need be you'll continue to carry forward your loss until you've exhausted it) So yes, the government does in a way compensate you for your losses.
Don't think that capital gains is just present in crypto. This is present everywhere.
Well yes, but this is all assuming that you have some sort of stable job. For most people, getting involved in Crypto should be something that they do on the side and they shouldn't be dumping enough money to bankrupt them when their tax return comes around.
The people who got fucked were people who continues to buy and sell Bitcoin as it ran up in price, problem was that these people never took their gains. I'll give you an example of this:
Bob had bought $10000 in Bitcoin when Bitcoin was worth 1000, which means that Bob bought 10 bitcoins. When Bitcoin went to 10000 per coin he sold it all, great for Bob. Bob didn't even have to wait that long for the run up to happen, this all happened in the span of one year and Bob sold his Bitcoins in December right before the year ended so he could buy some Christmas presents. Right now, Bob has made $90,0000 in profit (disregarding transaction fees, etc). Due to Short term capital gains laws in the US, Bob has to pay 12 percent tax on this, which equals abut $10,800 for the US government. Not too bad for them, they made some good money.
But the problem is that Bob later bought 90,000 worth of Bitcoin at 20000 after the year ended. This means that Bob bought 4.5 Bitcoins, which he then sold when it went down to 3,000 in this situation Bob has now lost 76,500. He is now left with about $13,500
The problem presents itself when Bob notices how the taxable situation works. When it comes to calculating any sort of taxes, Dec 31 is the ending part of the year. That's when you should set aside 10,800 (from before when he made money) and say this is the money that will be used to pay taxes. Bob is left with 13,500 in USD and owes the US government $10,800 from last year.
Yes he can carry forward the loss that he has from before, but it won't affect his prior year return.
After paying his taxes, Bob is left with $13,500-$10,800= $2,700 from his gains. He's also left with $76,500 in losses that he'll be carrying forward on his return for 25.5 years (unless he offsets other gains with this money) Don't be Bob, set aside money for tax time and take sometime to understand the tax law.
If anyone has any questions about Crypto tax, I'm more then willing to explain things.
If you have any other questions regarding Cryptocurrency trading and tax, or if you want to add onto my writing here. That'd be amazing. Teaching people is amazing. Love you all.The people who got fucked were people who continues to buy and sell Bitcoin as it ran up in price, problem was that these people never took their gains. I'll give you an example of this:
Bob had bought $10000 in Bitcoin when Bitcoin was worth 1000, which means that Bob bought 10 bitcoins. When Bitcoin went to 10000 per coin he sold it all, great for Bob. Bob didn't even have to wait that long for the run up to happen, this all happened in the span of one year and Bob sold his Bitcoins in December right before the year ended so he could buy some Christmas presents. Right now, Bob has made $90,0000 in profit (disregarding transaction fees, etc). Due to Short term capital gains laws in the US, Bob has to pay 12 percent tax on this, which equals abut $10,800 for the US government. Not too bad for them, they made some good money.
But the problem is that Bob later bought 90,000 worth of Bitcoin at 20000 after the year ended. This means that Bob bought 4.5 Bitcoins, which he then sold when it went down to 3,000 in this situation Bob has now lost 76,500. He is now left with about $13,500
The problem presents itself when Bob notices how the taxable situation works. When it comes to calculating any sort of taxes, Dec 31 is the ending part of the year. That's when you should set aside 10,800 (from before when he made money) and say this is the money that will be used to pay taxes. Bob is left with 13,500 in USD and owes the US government $10,800 from last year.
Yes he can carry forward the loss that he has from before, but it won't affect his prior year return.
After paying his taxes, Bob is left with $13,500-$10,800= $2,700 from his gains. He's also left with $76,500 in losses that he'll be carrying forward on his return for 25.5 years (unless he offsets other gains with this money) Don't be Bob, set aside money for tax time and take sometime to understand the tax law.
If anyone has any questions about Crypto tax, I'm more then willing to explain things.
Note: I'll be making this self mod to remove low effort sig spam. I am not going to be removing anything past that.
Jump to: