Tax obligation for personal Bitcoin traded to Fiat

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Quote from: Poker Player on September 20, 2023, 08:34:12 AM

Quote from: zasad@ on September 20, 2023, 08:03:49 AM

I think the issue here is the adequacy of taxes and tax policy. If a citizen receives income, then the tax system should be very simple for citizens. In Russia, for example, you need to download a smartphone application and pay 4% tax. For convenience, it is better to open a separate account in another banking application so as not to mix your salary and benefits with other income. If such a system worked in the USA and Europe, they would increase tax collection.

That's for sure. There are two things that increase tax revenue:

1. Ease of filing.
2. Low rates.

As in many countries neither of these two things is given in the field of cryptocurrencies many people do not declare them, as there is a certain ease of holding and trading cryptocurrencies without your state knowing about it. Now as governments see that they are missing quite a few taxes out there, in many cases what they have come up with is the opposite: the same difficulty to file taxes, KYC obligations everywhere, and high fees.

Do you know why people don’t declare their crypto savings in Russia?
If a citizen has a couple of thousand dollars, then this makes no sense, because for such amounts there are no fines and no obligation to declare. But if you declare, then you will have more rights in court and you will be able to file statements with the police, because your cryptocurrency is legally declared.

But let's look at the other side, and this is security.
If you have millions of dollars in your bank account, then it is difficult to steal them, but if bandits find out that an ordinary citizen has millions of dollars worth of cryptocurrency, they will rob him.

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Quote from: zasad@ on September 20, 2023, 08:03:49 AM

I think the issue here is the adequacy of taxes and tax policy. If a citizen receives income, then the tax system should be very simple for citizens. In Russia, for example, you need to download a smartphone application and pay 4% tax. For convenience, it is better to open a separate account in another banking application so as not to mix your salary and benefits with other income. If such a system worked in the USA and Europe, they would increase tax collection.

That's for sure. There are two things that increase tax revenue:

1. Ease of filing.
2. Low rates.

As in many countries neither of these two things is given in the field of cryptocurrencies many people do not declare them, as there is a certain ease of holding and trading cryptocurrencies without your state knowing about it. Now as governments see that they are missing quite a few taxes out there, in many cases what they have come up with is the opposite: the same difficulty to file taxes, KYC obligations everywhere, and high fees.

zasad@

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Quote from: Poker Player on September 18, 2023, 08:56:27 AM

Quote from: Porfirii on September 18, 2023, 07:58:05 AM

Quote from: Zoomic on September 18, 2023, 06:29:03 AM

I advise people to pay taxes and I am not part of those who try to use crypto to avoid paying tax but as I said above, if there is a way to differentiate between bitcoin earned from services or job from someone's fiat converted to BTC, that will be great.
-snip-

So do I, too.

Of course, you, like me and the whole forum pay the cryptocurrency taxes that apply, each and every one of us. We declare the earnings from the signature campaigns as income tax, depending on the country we also register as self-employed for it (no matter if you have another job) then every time we pay with bitcoin even if it is $20 we have it well noted to declare it in next year's income because it is a taxable event and if when you spent that $20 the price of Bitcoin was higher than when you collected it from the signature campaigns, or you bought it or got it in another way, you will have to pay taxes for it. Then we also pay taxes for every exchange we make in the currency exchange section, which you can sometimes see in feedback trusts "I exchanged 100USDT for his Bitcoin, he went first."

And let alone everything that moves in the gambling section, which is obviously also all declared as it should be. Only a few clueless people like the OP and a few heartless people do not fulfill these obligations, but I would say that the majority of the forum does.

I think the issue here is the adequacy of taxes and tax policy. If a citizen receives income, then the tax system should be very simple for citizens. In Russia, for example, you need to download a smartphone application and pay 4% tax. For convenience, it is better to open a separate account in another banking application so as not to mix your salary and benefits with other income. If such a system worked in the USA and Europe, they would increase tax collection.

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Quote from: Porfirii on September 18, 2023, 07:58:05 AM

Quote from: Zoomic on September 18, 2023, 06:29:03 AM

I advise people to pay taxes and I am not part of those who try to use crypto to avoid paying tax but as I said above, if there is a way to differentiate between bitcoin earned from services or job from someone's fiat converted to BTC, that will be great.
-snip-

So do I, too.

Of course, you, like me and the whole forum pay the cryptocurrency taxes that apply, each and every one of us. We declare the earnings from the signature campaigns as income tax, depending on the country we also register as self-employed for it (no matter if you have another job) then every time we pay with bitcoin even if it is $20 we have it well noted to declare it in next year's income because it is a taxable event and if when you spent that $20 the price of Bitcoin was higher than when you collected it from the signature campaigns, or you bought it or got it in another way, you will have to pay taxes for it. Then we also pay taxes for every exchange we make in the currency exchange section, which you can sometimes see in feedback trusts "I exchanged 100USDT for his Bitcoin, he went first."

And let alone everything that moves in the gambling section, which is obviously also all declared as it should be. Only a few clueless people like the OP and a few heartless people do not fulfill these obligations, but I would say that the majority of the forum does.

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Quote from: Zoomic on September 18, 2023, 06:29:03 AM

Quote from: Porfirii on September 17, 2023, 02:36:08 AM

Chances are that the OP won't come back after seeing that he can be obliged to pay taxes on his transactions/trades/swaps.

LOL. Why do you feel that the OP was seeking for how to avade tax?
-snip-

Who said that? I was just thinking that a newbie who believes that Bitcoin transactions don't pay taxes can feel discouraged enough to quit if he's proven otherwise. Based on the fact that 2 and a half weeks after writing his OP he didn't come back.

Quote from: Zoomic on September 18, 2023, 06:29:03 AM

I advise people to pay taxes and I am not part of those who try to use crypto to avoid paying tax but as I said above, if there is a way to differentiate between bitcoin earned from services or job from someone's fiat converted to BTC, that will be great.
-snip-

So do I, too.

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Quote from: Porfirii on September 17, 2023, 02:36:08 AM

Chances are that the OP won't come back after seeing that he can be obliged to pay taxes on his transactions/trades/swaps.

LOL. Why do you feel that the OP was seeking for how to avade tax? I advise people to pay taxes and I am not part of those who try to use crypto to avoid paying tax but as I said above, if there is a way to differentiate between bitcoin earned from services or job from someone's fiat converted to BTC, that will be great.

Quote from: Porfirii on September 17, 2023, 02:36:08 AM

I'm sorry but this is not 2010 anymore, and governments from most countries are years ahead of you if you still think that way. As another member said, you should learn about it before any (further) action.

This is correct that the government is wiser now but from the topic that I created "...bitcoin in your country ". It seems that some countries are not as wise as expected in making decisions relating to bitcoin.

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Quote from: aoluain on September 17, 2023, 02:22:32 AM

If the amounts transferred are only small will you ever be asked to prove where they
came from? I suspect not and only if the amounts get into the multiple 1000's will they
seek proof...

Each country has prosecution periods for such crimes unless the money transfers involve more serious criminal offenses, which can last up to 25 years or more.

The smaller the amounts and larger the transactions, the more difficult it is to look for evidence, because each transfer must be verified.
But if you receive transfers from other persons, then do not do it on bank cards in your country.
Study payment systems such as Epay, Payeer and others, of which there are many on bestchange and use them.

Porfirii

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Chances are that the OP won't come back after seeing that he can be obliged to pay taxes on his transactions/trades/swaps. On the other hand, what kind of intuition tells you that taxes are the same all around the world (when Bitcoin itself ranges from a forbidden asset to legal tender)? I would call it magical thinking instead.

I'm sorry but this is not 2010 anymore, and governments from most countries are years ahead of you if you still think that way. As another member said, you should learn about it before any (further) action.

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Quote from: phosphor1897 on August 30, 2023, 03:58:54 AM

If I transfer BTC into my Coinbase account from a personal wallet, and then sell my BTC for Fiat/USD... am I subject to tax obligation?

If yes, how much? In other words, what type of taxation am I subject to?

Intuition says there is no tax, for this is not income, is this true?

You dont say where you are based, what country? because every country has their
own system and some have similar ones to others.

In my country profits from Crypto are classified as "Capital Gains" and fall into that tax
bracket of 33%.

Quote from: Lucius on September 09, 2023, 05:06:00 AM

Quote from: zasad@ on September 09, 2023, 04:26:43 AM

In other words, I can sell more than EUR 5000 worth of cryptocurrencies every day, completely legally without KYC, and buy, for example, a house after a month - the problem arises if someone reports me (which can be anonymous), and then I have the problem of proving where the money came from.

If the amounts transferred are only small will you ever be asked to prove where they
came from? I suspect not and only if the amounts get into the multiple 1000's will they
seek proof...

zasad@

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Quote from: Lucius on September 09, 2023, 05:06:00 AM

Quote from: zasad@ on September 09, 2023, 04:26:43 AM

Your tax office is mocking you:)

There is no doubt about that, but the law is like that at the moment, and when you are not in a position to change the law, you have to adapt in one way or another.

Quote from: zasad@ on September 09, 2023, 04:26:43 AM

~snip~
I am sure that you also find a way out of the situation, but if the law is idiotic, then why is it needed?

In fact, there is a way and it's completely legal, and the law says that you can sell cryptocurrency in the amount of EUR 1000 per transaction without KYC, and there are dozens of physical branches where you can do it. Of course, all this makes sense for smaller amounts, while the question of the origin of the property can always be raised if your legal earnings do not match the value of the property.

In other words, I can sell more than EUR 5000 worth of cryptocurrencies every day, completely legally without KYC, and buy, for example, a house after a month - the problem arises if someone reports me (which can be anonymous), and then I have the problem of proving where the money came from.

I think that you will agree that buying a house is not a cheap purchase and data on such purchases is automatically transferred to the tax office for verification. If the price of the house does not correspond to your official income for the last 3-10 years, then the tax office will ask where you got the money.
In Russia, in this case, defendants bring to the tax office several loan or gift agreements from close relatives.

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Quote from: zasad@ on September 09, 2023, 04:26:43 AM

Your tax office is mocking you:)

There is no doubt about that, but the law is like that at the moment, and when you are not in a position to change the law, you have to adapt in one way or another.

Quote from: zasad@ on September 09, 2023, 04:26:43 AM

~snip~
I am sure that you also find a way out of the situation, but if the law is idiotic, then why is it needed?

In fact, there is a way and it's completely legal, and the law says that you can sell cryptocurrency in the amount of EUR 1000 per transaction without KYC, and there are dozens of physical branches where you can do it. Of course, all this makes sense for smaller amounts, while the question of the origin of the property can always be raised if your legal earnings do not match the value of the property.

In other words, I can sell more than EUR 5000 worth of cryptocurrencies every day, completely legally without KYC, and buy, for example, a house after a month - the problem arises if someone reports me (which can be anonymous), and then I have the problem of proving where the money came from.

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Quote from: Lucius on September 08, 2023, 08:01:23 AM

Quote from: zasad@ on September 07, 2023, 06:41:43 AM

And who in your country makes tax returns for employees who receive a salary. In my country there is a concept of "tax agent". My employer performs this function and submits an income tax return for me and withholds tax from the salary, which he then transfers to the tax bank account. If every citizen did this on their own, but it is unprofitable to administer some taxes, because the costs for all actions will be more expensive than the tax itself.

Before, we all did it independently every year, we had to submit our tax returns by the specified date, but considering that the system has been digitized and networked, and everyone has insight into everything, everything goes automatically for most employees. Of course, there are certain categories of people who still have to fill out applications and go to tax offices, especially those who have other income.

Let's take the example of signature campaigns that pay every week, if I wanted to legalize that income, I would have to go to the tax office every week and fill out the forms because every such income must be reported within a few days of receipt.

Quote from: zasad@ on September 07, 2023, 06:41:43 AM

~snip~
This system is also not perfect, but it saves a lot of time and money for the government.

We will hardly find a system that is perfect, but I am sure that the authorities will always look for a way to collect as many taxes as possible. That's how they regulated sports betting and the lottery in my country, every win is automatically reduced by the amount of tax, and there is no way you can win something without paying tax.

Your tax office is mocking you:)
Tax for entrepreneurs in Russia either once a quarter or once a year, depending on the tax regime. Once a month, the employer transmits only reports on employees' salaries.
If I want to legalize any income for 2023, then I must submit 1 tax return by the end of April 2024, where there will be the amount of income for the entire 2023, and pay 13% tax. But even this is done by a few, and if you need to declare every income within a week, then this is crazy.
I am sure that you also find a way out of the situation, but if the law is idiotic, then why is it needed?

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Quote from: zasad@ on September 07, 2023, 06:41:43 AM

And who in your country makes tax returns for employees who receive a salary. In my country there is a concept of "tax agent". My employer performs this function and submits an income tax return for me and withholds tax from the salary, which he then transfers to the tax bank account. If every citizen did this on their own, but it is unprofitable to administer some taxes, because the costs for all actions will be more expensive than the tax itself.

Before, we all did it independently every year, we had to submit our tax returns by the specified date, but considering that the system has been digitized and networked, and everyone has insight into everything, everything goes automatically for most employees. Of course, there are certain categories of people who still have to fill out applications and go to tax offices, especially those who have other income.

Let's take the example of signature campaigns that pay every week, if I wanted to legalize that income, I would have to go to the tax office every week and fill out the forms because every such income must be reported within a few days of receipt.

Quote from: zasad@ on September 07, 2023, 06:41:43 AM

~snip~
This system is also not perfect, but it saves a lot of time and money for the government.

We will hardly find a system that is perfect, but I am sure that the authorities will always look for a way to collect as many taxes as possible. That's how they regulated sports betting and the lottery in my country, every win is automatically reduced by the amount of tax, and there is no way you can win something without paying tax.

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Quote from: Lucius on September 07, 2023, 06:07:31 AM

Quote from: zasad@ on September 07, 2023, 05:58:53 AM

~snip~
I think that the exchange should become a tax agent and withhold traders' taxes and send data to the tax office. Then it will save a lot of time.

It would be the simplest for clients because they would not have to do absolutely anything when it comes to paying taxes (of course not in the case that CEX only sends data but automatically charges tax), but again the question arises why CEX would take on that part of the work when there are competent services for that. In addition, how to collect tax from clients from different countries, say within the EU, who use the same CEX, but have different tax rates?

And who in your country makes tax returns for employees who receive a salary. In my country there is a concept of "tax agent". My employer performs this function and submits an income tax return for me and withholds tax from the salary, which he then transfers to the tax bank account. If every citizen did this on their own, but it is unprofitable to administer some taxes, because the costs for all actions will be more expensive than the tax itself.
But it’s easier to work with a salary, because it is paid several times a month, but how to check traders who have thousands of transactions on crypto exchanges?
And if the trader does not agree with the decision of the tax inspector and goes to court? What if a thousand traders go to court? The system collapsed.
On the exchange, traders go through the KYC procedure and the exchange can withhold tax depending on the citizenship of the trader.
This system is also not perfect, but it saves a lot of time and money for the government.

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Quote from: zasad@ on September 07, 2023, 05:58:53 AM

~snip~
I think that the exchange should become a tax agent and withhold traders' taxes and send data to the tax office. Then it will save a lot of time.

It would be the simplest for clients because they would not have to do absolutely anything when it comes to paying taxes (of course not in the case that CEX only sends data but automatically charges tax), but again the question arises why CEX would take on that part of the work when there are competent services for that. In addition, how to collect tax from clients from different countries, say within the EU, who use the same CEX, but have different tax rates?

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Quote from: sokani on September 06, 2023, 01:20:10 PM

Quote from: phosphor1897 on August 30, 2023, 03:58:54 AM

If I transfer BTC into my Coinbase account from a personal wallet, and then sell my BTC for Fiat/USD... am I subject to tax obligation?

If yes, how much? In other words, what type of taxation am I subject to?

Intuition says there is no tax, for this is not income, is this true?

Just as Fiatless commented earlier, crypto taxation varies in different countries. Taking my country for example, the crypto tax is newly implemented, it is just few months old actually and it is 10% of capital gains. The procedures and guidelines to enforce the tax is being worked upon by the Federal Inland Revenue (FIR) and Joint Task Board but my guess is, it will be through centralized exchanges that have the jurisdiction to operate in my country. The tax implementation is still not glaring at the moment but I think P2P users will be able to get off the hook.

Have you already been required by regulators to file a tax return on the coins that you hold for the initial count of profits?
In my country, if you trade on an exchange, the tax is withheld by the broker. I already wrote about the situation in Europe, when every quarter exchanges send dozens of terabytes of trade logs of European citizens to the tax office, and the tax office does not know what to do with it.
I think that the exchange should become a tax agent and withhold traders' taxes and send data to the tax office. Then it will save a lot of time.

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Quote from: phosphor1897 on August 30, 2023, 03:58:54 AM

If I transfer BTC into my Coinbase account from a personal wallet, and then sell my BTC for Fiat/USD... am I subject to tax obligation?

If yes, how much? In other words, what type of taxation am I subject to?

Intuition says there is no tax, for this is not income, is this true?

Just as Fiatless commented earlier, crypto taxation varies in different countries. Taking my country for example, the crypto tax is newly implemented, it is just few months old actually and it is 10% of capital gains. The procedures and guidelines to enforce the tax is being worked upon by the Federal Inland Revenue (FIR) and Joint Task Board but my guess is, it will be through centralized exchanges that have the jurisdiction to operate in my country. The tax implementation is still not glaring at the moment but I think P2P users will be able to get off the hook.

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Quote from: Zoomic on September 04, 2023, 03:11:33 PM

The government is trying to avoid some things like inconsistencies and at the same time wants to be efficient in the cryptocurrency regulations and taxation. In as much as there is no uniform yardstick to measure these taxes, there will always be a problem.
If for instance the government wants to tax only bitcoin earned from services, and exclude bitcoin that I sent to coinbase for only conversion purpose, how will they be able to manage it. It therefore means that everyone working and being paid will pretend that it is their personal bitcoin they want to convert to fiat. We must continue to manage until there is a better waybof taxation. The system is flawed for now.

Of course, there are many situations when a user can get problems from his own stupidity. P2P exchange. The user uses his own money to buy Bitcoin on the Bisq P2P exchange for $10,000, then sells Bitcoin via bank transfer for $11,000. So, the tax office will most likely consider $11,000 as income, although you earned $1,000.
Therefore, in financial transactions you need to study tax and criminal laws first.

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The government is trying to avoid some things like inconsistencies and at the same time wants to be efficient in the cryptocurrency regulations and taxation. In as much as there is no uniform yardstick to measure these taxes, there will always be a problem.
If for instance the government wants to tax only bitcoin earned from services, and exclude bitcoin that I sent to coinbase for only conversion purpose, how will they be able to manage it. It therefore means that everyone working and being paid will pretend that it is their personal bitcoin they want to convert to fiat. We must continue to manage until there is a better waybof taxation. The system is flawed for now.

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Quote from: phosphor1897 on August 30, 2023, 03:58:54 AM

If I transfer BTC into my Coinbase account from a personal wallet, and then sell my BTC for Fiat/USD... am I subject to tax obligation?

If yes, how much? In other words, what type of taxation am I subject to?

Intuition says there is no tax, for this is not income, is this true?

Before any action with cryptocurrency, I would read several articles.
https://coinledger.io/blog/cryptocurrency-tax-rates
You should never use intuition in tax law because it leads to penalties.
In such a case, the most important question is which country you are in and whether you are a tax resident of that country.
Sometimes it's easier to exchange bitcoin for dollars in an exchanger:
https://www.bestchange.com/bitcoin-to-visa-mastercard-usd.html

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Quote from: phosphor1897 on August 30, 2023, 03:58:54 AM

If I transfer BTC into my Coinbase account from a personal wallet, and then sell my BTC for Fiat/USD... am I subject to tax obligation?

If yes, how much? In other words, what type of taxation am I subject to?

Intuition says there is no tax, for this is not income, is this true?

Depends. As Fiatless says taxation is relative to the country you live in, but I can tell you that, in general, if you have received that amount of Bitcoin for work you have done, it should be subject to income tax. Also if when you sell it you obtain a profit with respect to the fiat countervalue at the time you were paid for the work done, it would also be subject to capital gains tax. The same applies if you simply bought it. If you make a profit on it when sold, it is subject to capital gains tax.

But as said this may vary depending on your tax residence, and there are for example minimum exemptions or other exemptions that may apply.

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Quote from: phosphor1897 on August 30, 2023, 03:58:54 AM

If I transfer BTC into my Coinbase account from a personal wallet and then sell my BTC for Fiat/USD... am I subject to tax obligation?

If yes, how much? In other words, what type of taxation am I subject to?

Intuition says there is no tax, for this is not income, is this true?

Taxation policies are not uniform in all the countries. Every country has its tax policies and calculations. It will be better to seek the advice of a tax officer in your location to determine how crypto taxes are calculated and paid in your country. In some countries, the exchange acts as a tax collector for the government. In that case, the tax is added to the transaction charges and the tax will be remitted to the government.

These links of Coinbase about understanding crypto taxes might help.
https://www.coinbase.com/learn/crypto-basics/understanding-crypto-taxes#:~:text=If%20you're%20holding%20crypto,you%20have%20a%20taxable%20event.

https://www.coinbase.com/learn/your-crypto/understanding-capital-gains

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If I transfer BTC into my Coinbase account from a personal wallet, and then sell my BTC for Fiat/USD... am I subject to tax obligation?

If yes, how much? In other words, what type of taxation am I subject to?

Intuition says there is no tax, for this is not income, is this true?

Topic: Tax obligation for personal Bitcoin traded to Fiat (Read 292 times)