Taking profits & tax. | Bitcointalksearch.org

Findingnemo

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Quote from: JamesDaniel90 on Today at 06:30:41 AM

So I’m right in thinking that I wouldn’t have to pay any tax until i have withdrawn the same amount I have invested?

With my example, I’ve invested $9k and if I only make 3 withdrawals of say $2k, $3k and $1k , I wouldn’t have to pay any tax on them as that only comes to $6k which is $3k less than my total over all investment?

It is only once I have withdrawn the same amount or more that I have invested overall that I have to worry about paying tax?

Nope, HMRC doesn't allow you to report it as only capital. Every time you sell crypto holding will be considered as selling the profit included so the capital amount becomes irrelevant and you only need to calculate whether you are in profits or loss. If you withdraw 2K and you made 500 from it as profit then that 500 is taxable event and you need to pay taxes as per the rate.

JamesDaniel90

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I just thought there would be many of you who have been in crypto for a good 5 years or more who would be able to answer these questions i have thats all.

I get the laws change every year but the basics still the same.

I am going to have to look into a professional soon as just want to be ready when it comes to selling in the next 6 months or so.

CryptSafe

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OP, isn't it better you consult a professional who could properly guide you on how to go about your tax payment? There is nothing bad bringing up this here but at least you would listen to others' ideas and opinions and have in mind what they might be saying based on their geographical location as they have experienced in their various countries different from yours. I have also come to understand that exchanges do give the government the list of assets held by their nationals to properly calculate the tax to be paid by each holder so that not anything is mixed up or missed. You can read the material through the link provided by Lucius for a proper understanding since you are talking about the UK.

Lucius

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Quote from: JamesDaniel90 on Today at 02:46:30 AM

~snip~
I have been investing in crypto just shy of 3 years now and up till now I have been mainly buying with the odd bit of taking profits in the last 3 or 4 months.

In those 3 years, you've asked the same question you're asking now several times. As others have already written, you could have resolved your doubts and concerns by contacting your tax office because they know best.

Haven't you learned anything from this topic you opened a little less than 1 year ago?

CRYPTO PROFITS & UK TAX

JamesDaniel90

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So I’m right in thinking that I wouldn’t have to pay any tax until i have withdrawn the same amount I have invested?

With my example, I’ve invested $9k and if I only make 3 withdrawals of say $2k, $3k and $1k , I wouldn’t have to pay any tax on them as that only comes to $6k which is $3k less than my total over all investment?

It is only once I have withdrawn the same amount or more that I have invested overall that I have to worry about paying tax?

JiiBs

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Quote from: NotATether on Today at 05:10:19 AM

Quote from: JamesDaniel90 on Today at 03:03:59 AM

I know being from the UK my tax is 24% which isn’t the best but it could be worse and happy to pay it when I have to.

I will just start paying tax then only once I have withdrawn back to my bank what I have put in over the last 3 years.

Keep in mind though that some exchanges like Coinbase report your entire crypto balance on the platform to the government tax agencies, so they might be able to see if you are hiding some more coins from them unless you only use the exchange for withdrawing.

This is exactly why you should be asking this here. It’s not just tax but cryptocurrency tax. It has a different deduction to it as opposed to the norms though, it works almost the same. It’s important to get the bases to this right than trying to cut corners which can result in tax evasion, a punishable offense by law.

Not having to pay any crypto taxes first hand, the much I’ve read talks about your profit being taxable and not your investment. If you have invested a total of $9k, that’s still within your capital. It doesn’t consider your profit and so, it shouldn’t be taxed. Just as you don’t tax shares that haven’t produced any profit.

Only when there is a profit of let’s say, you invested $9k and your balance has risen to $15k which is a $6k increment with $6k being your profit. The taxable amount here becomes the $6k.

btcltcdigger

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Quote from: JamesDaniel90 on Today at 04:03:38 AM

Surely there are many who have been in crypto many years though who know answers and can give advice.

This time in 3 years there will be others who will be doing their taxes for the first time and I will be happy to confirm any questions they will have then.

Tax laws change constantly man. What might have been 3 years ago doesn't mean it's good advice now. And whatever is the proper tax process now might not be good in 3 years.
As crypto adoption grows, governments see that they can get more and more taxes from people, so they constantly change the laws to suit them, not you.

Go to a tax attorney, ask what's the process NOW. It might be different even tomorrow

JamesDaniel90

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Quote from: NotATether on Today at 05:10:19 AM

Quote from: JamesDaniel90 on Today at 03:03:59 AM

I know being from the UK my tax is 24% which isn’t the best but it could be worse and happy to pay it when I have to.

I will just start paying tax then only once I have withdrawn back to my bank what I have put in over the last 3 years.

So that means you're only paying tax on the withdrawals.

Keep in mind though that some exchanges like Coinbase report your entire crypto balance on the platform to the government tax agencies, so they might be able to see if you are hiding some more coins from them unless you only use the exchange for withdrawing.

In such a case, they might ask you to provide additional reports and stuff like that.

Only on withdrawals once i have withdrawn the amount back to my bank that i have invested in the last 3 years.

Using my £9k example, if i have invested £9k over the last 3 years but I decide to only withdraw £2k back to my bank today, im not going to pay tax on that am I as its not profit as I would still be down £7k compared to the amount i invested overall.

NotATether

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Quote from: JamesDaniel90 on Today at 03:03:59 AM

I know being from the UK my tax is 24% which isn’t the best but it could be worse and happy to pay it when I have to.

I will just start paying tax then only once I have withdrawn back to my bank what I have put in over the last 3 years.

So that means you're only paying tax on the withdrawals.

Keep in mind though that some exchanges like Coinbase report your entire crypto balance on the platform to the government tax agencies, so they might be able to see if you are hiding some more coins from them unless you only use the exchange for withdrawing.

In such a case, they might ask you to provide additional reports and stuff like that.

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Quote from: btcltcdigger on Today at 04:01:18 AM

Don't ask people on the forum about taxes, more likely than not, you'll get misguided information, even if it's given in best intent.
Go to your local tax advisor who understands crypto and ask there. Everything else is just best guess or speculation

Best advice. I once asked a question about crypto tax only to realize that I should not have asked on the forum rather should have asked a tax professional about it. That is why I agree with you, most of us here are not well versed in taxes and would give information based on what think they know and not what the law says.

JamesDaniel90

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Quote from: btcltcdigger on Today at 04:01:18 AM

Don't ask people on the forum about taxes, more likely than not, you'll get misguided information, even if it's given in best intent.
Go to your local tax advisor who understands crypto and ask there. Everything else is just best guess or speculation

Surely there are many who have been in crypto many years though who know answers and can give advice.

This time in 3 years there will be others who will be doing their taxes for the first time and I will be happy to confirm any questions they will have then.

btcltcdigger

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Don't ask people on the forum about taxes, more likely than not, you'll get misguided information, even if it's given in best intent.
Go to your local tax advisor who understands crypto and ask there. Everything else is just best guess or speculation

JamesDaniel90

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Quote from: Oshosondy on Today at 02:52:16 AM

If you are not in profit, you do not need to pay tax. Only the profit are taxed and not the amount that you have.

If you are in profit, you need to pay tax. Read the tax percentage that you suppose to pay. If you have no idea, you can consult a professional in charge about it.

I know being from the UK my tax is 24% which isn’t the best but it could be worse and happy to pay it when I have to.

I will just start paying tax then only once I have withdrawn back to my bank what I have put in over the last 3 years.

Oshosondy

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If you are not in profit, you do not need to pay tax. Only the profit are taxed and not the amount that you have.

If you are in profit, you need to pay tax. Read the tax percentage that you suppose to pay. If you have no idea, you can consult a professional in charge about it.

JamesDaniel90

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With the bull run expected to heat up in the coming months I want to fully understand when it comes to paying tax on my crypto as I have not had to do this before, it’s my first bull run. I am based in the UK.

I have been investing in crypto just shy of 3 years now and up till now I have been mainly buying with the odd bit of taking profits in the last 3 or 4 months.

I have a question , let’s say for example I have invested £250 per month for 3 years which is £9k total. Does that mean I can withdraw £9k back to my bank before I start paying tax as anything under £9k back to my bank would not be profit from the amount I’ve invested?

For example if I was to withdraw £2k back to my bank today, because that is below the £9k I have invested overall I am not in profit yet so shouldn’t have to pay tax on it?

It is only when I will have withdrawn £9k total that I would then start having to paying tax?

Topic: Taking profits & tax. (Read 97 times)