Topic: US Income Taxes from Trading Crypto and Mining - Coinbase (Read 1923 times)

There is waste everywhere. Part of being human is understanding and living with  imperfection in the world.

 If AI's take over, people will begin to understand what "waste" is and it might be them.


I am  very small operation, with a small net worth and operate on what is termed a cash basis.  I'm happy to pay my US taxes on what I owe on crypto and it's pretty easy.

 I'M NOT A TAX PROFESSIONAL!

For 2016 I used turbo tax home and business and ran it in idiots mode where it goes through everything.

a) I took the full section 179 deduction for the mining (computer) equipment. This allows you to expense it in the CY. When I sold any mining cards, it was counted as revenue.

b) With an expense ledger, I tracked all applicable and legitimate expenses. The largest expense being electricity. Number 3 expense was probably shipping.

c) I channeled all my coin revenue through coinbase to make revenue easy to track.

d) If I purchased stuff with BTC, it was only mining equipment.


Based on prompting by turbo tax, my tax plan for next FY is to lower my tax obligation by funding a 401k. The older you are the more money you can place in a 401k. The 401k contribution should pretty much lower my tax liability even further.

While I had a small profit and it is fun, minimum wage definitely pays more.

The IRS is the one place in the USA where you are guilty, until proven innocent.  They get to do whatever they want.  You were responsible to report the income whether you got a 1099 or not.  Not getting a 1099 is not a free pass.  You still are required to report your gains.

I hate paying taxes and do everything I can to keep my bill low.  I understand tax law very well.  My point in starting this thread was to say be careful how you sell your crypto and turn it into USD.

I refuse to pay taxes on crpyto, I already LOOSE OVER 25% of my regular job income to pay "taxes". Most of which go to others(leeches, welfare queens) ..... NOT infrastructure.

Ill be god damned if they think im paying taxes on fucking crypto. This is just the greedy government sticking their hands in everyone's pie as soon as it seems lucrative enough to do so....Just like the FAA making shit up on the spot about drones and "registration" on what is essentially a toy (come on, a phantom 3 is a fucking toy)

I understand the need for taxes in a society but I already pay my fair share, isnt that enough?

Its gonna be so fucked for those people that traded/mined in 2014-2016 if they get a 1099 retroactively. You dont get to just make shit up and then demand back taxes, that to me is 100% wrong.

Anytime someone is forced to give up their money at gun point is immoral.  And if you don't thinks its at gun point . . . give it a try; after the courts are finished the guys with guns show up to take you to jail.

Roads . . . sure.  Its one of the few valid things a city/state (not federal) should spend tax dollars on.

Schools . . . NO.  I spend less than the government does in my state to send my kids to a private school (that accepts no government money either), and I still am forced to pay for everyone elses through my taxes.  The free market would do significantly better and people could afford it themselves if the government wasn't taking so much of their money.

But hey, this is getting a bit off topic.  I'd rather decide where my money goes, since the government has such a bad track record of misusing it.

In the end, pay the taxes you are supposed to pay and not a penny more.  And make sure to vote for people that are actually fiscally responsible (i.e. 1% of the currently elected officials out there).

... don´t worry about taxes.

Just bring them in mind, when you trade
or take a rise from your "stocks".

Taxes are not bad (if not misused)
because without
there wouldn´t be streets, nor schools !

We all have to give our littlebit,
to keep the big wheel turning.

... just my two satoshies.

  PanneKopp

As a libertarian, I think taxes and the government are inherently immoral . . . you won't get any argument from me on that. 

But when reality sets in we still have to do our due diligence.  Luckily the free market comes to the rescue where the government fails miserably, and helps us comply with the ridiculousness.

The site I mentioned above does just that.  Don't ever expect the IRS to make it easier though . . . that's a fairy tale sadly. 

There is nothing wrong about taxes for usa if you don't live in usa don't use companies based in usa

Here ya go:
https://cointracking.info/

This will import all of your trades from the exchanges, with cost basis and calculate capital gains.  You can test it out on a few trades, but if you do a lot of trading you will need to pay for it.  But its worth the price if you are making money and professionally trading.

What a bunch of hippocrates ! I've heard 10k people say pay your taxes and do the right thing in the crypto space. Yet only 900 people reported on their taxes.  

This stuff is more complicated than regular stocks, No tax form is issued, Prices are so volatile, so many moving parts, so many different coin parings.  How do you even properly calculate all that.  

Don't get me wrong we should pay our taxes but they need to make it easy to track what's taxable  or simply the tax for this complicated volatile space.

Even Congress is questioning how the IRS is improperly handling this and needs to do a better job instead of going on a witch hunt

I dont mine so I don't have to worry about that side of things.

However, I do trade and buy and sell. And since Bitcoin/Eth is a fungible product, I buy and exchange them on the same day for other things -- long story short capital gains = 0.

Congrats  

Let's say that I bought 1 Eth for $10 awhile ago. Today I buy 1 eth for $300, and tomorrow I sell 1 Eth for $300. I did not take a $290 profit, I sold 1 eth that I bought for 300, for 300. 300 - 300 = 0 (because 1 eth is 1 eth is 1 eth).

Never had an issue with taxes doing it this way.


!!!!IN NO WAY IS THIS PROFESSIONAL TAX ADVICE OBVIOUSLY!!!!

It's illegal to evade taxes.  If you like your life the way it is . . . don't do illegal things.

This is 100% the truth. People that try to screw the government by not paying taxes will eventually get screwed themselves.  My wife runs a small mining farm and at least 75% of the work once the rigs are built is documentation, paperwork, ledgers for tax purposes etc...

If you are always doing the right thing, you never have to worry about being caught doing the wrong thing.  

Pay your taxes, don't try to get out of it.  Take every deduction legally possible.  If you account for everything, you can write off all of your purchased gear including motherbaords, cpu, memory, GPUs, electricity, etc.  Document everything and keep it safe.  These are losses on your balance sheet and go against your bottom line, lowering your tax burden.  Once you make more than $1000 a month, you should also start making quarterly tax payments to the IRS as well.

Hire an accountant to help you out if you don't know what you are doing or don't have the time to do it right.

This is a business like any other.  Don't get into it if you don't want to do it right.

This has always been the guidance from the IRS and the latest memo came out in November of 2016 as far as I know. The fact is that people that haven't or don't claim their income are at massive risk because the government always finds a way to get those numbers. Pay your taxes people!

Move to japan, I hear the cherry blossoms are pretty this time of the year

IRS considers gains from mining as normal income. Gains made from buying/selling cryptos are treating the same as other securities, and will fall under capital gains.
https://www.irs.gov/uac/newsroom/irs-virtual-currency-guidance

http://www.investopedia.com/university/definitive-bitcoin-tax-guide-dont-let-irs-snow-you/

If you are not aware the IRS and Coinbase/GDAX are locked up at the moment in a battle over ALL trade records from 2014-2016.  They are in court.  Thankfully Coinbase is fighting them.  However, Coinbase will probably have to give up something.  Meaning they might start issuing 1099's.  If you have been trading in Coinbase/GDAX for years you may have issues.  If just started using Coinbase/GDAX you should consider getting out.  If you are new to mining/trading do it somewhere off of US shores.  Eventually I think Poloniex is going to suffer the same fate as Coinbase.  Since crypto has exploded in 2017, the IRS is going to really dig in their heels.  They want the tax money and so do the politicians in Washington and every state legislature in the country.

If you are doing mining full time the IRS will consider it your full time employment and will want regular income and social security taxes.  IF you just trade or mine a little on the side you might be able to get away with just capital gains taxes (which would be less than regular income).  Unless you are not making much with mining and live very frugally, in which case your tax bill would be minor because you get to write off all your equipment and expenses from mining.

So, in summary do not sell crypto in Coinbase and then take the money and put it in your checking account.  The IRS will be coming, I am not sure when, but they will be coming.  And Coinbase is a US company so they will have to abide by whatever Federal Courts come up with.

If Coinbase issues 1099's, not sure if they will have to do it retroactively, that will be up to the courts to decide.  But you can protect yourself going forward.

Be careful how you sell your Crypto.  Unless you like to pay taxes, then go ahead and have fun with Coinbase/GDAX!