Topic: Tax question (Read 235 times)

It all depends on the specific tax rules in your country. In most countries, states have not yet introduced a tax on crypto-currency activities. However, in general, yes, practically in all countries, the net increase in the price of bitcoin when stored in a purse is regarded as a capital gain and this tax must be paid from this increment. If you sell part of your bitcoins through the exchange, there is already income from the crypto currency, from which almost all countries oblige to pay tax. True, each country has its own minimum amounts, from which it is necessary to pay income tax. Therefore it is necessary to study the tax legislation of your country.

Yeah thats the best thing for you to keep hold the record of your transactions and prepare for the taxes. I like your attitude man.

Good points by all. I’m not trying to cheat the system (despite what it may seem), but rather keep my shit organized as best I can for the tax man. I have 8 coins I plan on long term holding. I have bitcoin.tax finally accurate. Now I’m thinking doing day trading will f everything up as far as paper trail goes. If I make a million, I have no problem paying my share of taxes...keeping it organized is another thing though

If you think about it, you're going to have substnatially more amounts of money (depending on how you're trading goes) and you're probably going to be making bigger purchases in life with this money, with this you're going to promt some sort of audit by state tax authorities or federal and then you're going to be fucked when they find all of this stuff.

Tax fraud is a LARGE problem, and I know no one likes to pay taxes but if you don't want to be going to prison then you're going to have to deal with the tax code.

Work with accountants and lawyers if you're making THAT much money, to limit the amount that you owe.

I think you feel pretty much the way I do. The real killer for me is the jail time. I might protest something government is spending money on and march on Washington because I know even if I’m arrested I’ll be out right away. I do draw the line with tax protesting because I really don’t want a new boyfriend for the next few years. LOL

However, I do know some people that don’t share my feelings about jail time. I actually have had a crazy friend that was a dealer and used the phrase, “who cares, three hots and a cot”. That’s why I say it’s a personal choice and no one can tell you what’s right for you.

I do.

However, I don't see taxes as the ONLY way for those things to exist.


Privatize more of it and those that like it can pay for it. Those that don't, won't have to.


Those parts of it that I like?  Sure.  Those parts that I don't like?  I'd prefer not to.


And this is why I ALWAYS report ALL my income and ALWAYS pay all the taxes that I'm legally required to pay.

The exact same reason that I would turn my entire wallet over to someone that is pointing a gun at my head if they asked for it.  The consequences aren't worth the risk.


I'd prefer it if my government didn't steal my money.  However, if they are going to do it, then I'm not going to try to steal it back or hide it from them.  They have bigger guns than I do.

This has always been a point of contention for bitcoin users. This is actually a much deeper issue than it appears to be on the surface and each person needs to evaluate where they stand on the issue personally.

Bitcoin is supposed to be this great semi-anonymous system that allows you to avoid third party involvement in the way you use money, right? You don’t need a bank to send money to your friends or to buy something online. Unfortunately, that’s not the way most people are using bitcoin (yet).

Before you decide to be a tax cheat think about how you're using bitcoin and what you believe about society and jail time. If you never involve an exchange or any other institution that may be audited, raided or voluntarily comply with AML/KYC laws (like Coinbase) then you can probably be a tax cheat.

Now ask yourself how you feel about taxes. Do you like having paved roads, street lights and firefighters? Sure you don’t like some things your government spends money on but you probably like others. Ask yourself if you want to support your society or not.

The last thing is how comfortable are you with paying the penalty if you get caught. Penalties for tax evasion can run from a small monetary fine all the way to years behind bars. Are ok with getting caught because it’s a real possibility?

I still don’t see how the IRS can put a taxable value on coins you haven’t sold. It’s still considered property. If you haven’t sold them then you haven’t made anything yet and what value do you claim when the price fluctuates so much daily? Maybe the IRS should call it a currency if they want to tax it as such.

It depends on your country's law but you need to cash out that btc in a way which you will reveal your identity, if you exchange btc for lambo, you still probably pay tax

On where I live currently, citizens are required to report it voluntarily and personally to their country's tax department. If you haven't and they found out, that would already be tax fraud/evasion in their books and may land you to jail and serve for up to 20 years. The government doesn't have a way to find out, but if they asked these exchanges for such records, then you could end up getting jail time if you haven't reported it or pay the necessary tax and continue trading without anxiety.

Virtually all the exchanges I'm familiar with are now collecting extensive AML/KYC information to document your identity. Assume that at some point your trading information will be shared with authorities if the exchanges have your personal identifying information.

Then it's a question of figuring out what constitutes a taxable event, which will depend on your jurisdiction. Some countries are making intra-crypto trading a taxable event for capital gains, some are not. In many cases it is not clearly stated and there is room for argument. My own interpretation of US federal law (and I am NOT an expert) is that the recent tax law just passed closes the door for traders to claim that intra-crypto exchanges were "like kind" exchanges that do not constitute taxable events. Arguably (and this seems to be the position of the vast majority of people I've seen comment), up until Jan. 1 trading between cryptos was not something to trigger a capital gains tax, only cashing out to USD.

If someone thinks that is still a defensible position I'd be interested in hearing it. I think it is how the law should be structured (which as I understand it is how it works for trading between various fiat currencies, until you trade back to dollars), but we'll need a federal law spelling that out now. As an alternative, I'd really like it to be standard (required?) that exchanges report the $ value of every trade in an easily retrieved format. As it stands right now it's borderline impossible to calculate and maintain cost basis if you trade a lot across multiple exchanges.

Coinbase is required by the IRS assuming your in the US to report if you do $20,000 or more in a year. If your bank account is linked to coinbase or you do a wire transfer to your bank. Coinbase will certainly have a record of it. The IRS at any point could go back to coinbase and ask for all  of there records. If your selling a large amount on an exchange in a year. You better report it to your accountant. If you want to sell it for cash there are plenty of other places to sell person to person that wouldn’t be reported like an exchange. I’m not saying that is legal either but if your trying to fly under the radar this would be my only avenue. Don’t use your bank or exchange at all.

They can't actually know if you didn't give any personal information to exchanges.
But in my country you won't pay any tax if your coins are valued under 25.000 euro, so 2 Bitcoins wouldn't be a problem here.
It might be worth to check your countries' tax regulations.

Depending on your jurisdiction, you are generally required by law to report it yourself. Failure to do so is tax fraud. You might get away with it (lots of people get away with not reporting cash income), but you'll have to decide if you want to be a criminal and if the potential consequences are really worth the risk?

I have 1 bitcoin in a hardware wallet (purchased through coinbase), and my plan was to hold for long term thus reducing tax burden. Hypothetically, if I sent that 1 BTC to a Binance account, did some day trades etc and ended up with 2 BTC, and then “replaced” the 1 bitcoin back into my hardware wallet (leaving the newly made 1 on Binance), and a year later sent to coinbase and sold it, how would anyone catch that I used that Bitcoin for trading and I owe taxes on those trades?