Topic: When to report crypto on taxes? (Read 353 times)

No one is going to look into a one-off occurrence either way, but if have loads of unexplained property coming in to the extent that it's noticeable, problems can arise. That's why programs like "Too Much Bling, Give us a Ring!" exist, to get people to snitch on their neighbors to the tax authorities. If that happens and they do a little digging, they might find out more than you'd like about your unreported Bitcoin activity.

That's what I had in mind. Cash payments don't require any ID and it's the same with Bitcoin payments. Even if the item gets delivered to your house it's not going to be grounds to prosecute you because you can't be identify as the person who paid for it. You could be taking the delivery for someone else and it's not like you have to sign it with your own name. When I get something delivered they just tell me "we have a package for ... please sign" They don't even ask if I'm that person. I had friends who were at my house receive deliveries for me without any problems.

If you have to register as legal owner of the thing like when you buy land it's different and easy to trace but you can buy a watch worth much more than a new car and never have to sign anything or show an ID.

There also other ways like ATMs that don't require you to scan your ID. There are exchanges that allow you to withdraw in an ATM without any KYC.

I'm not asked for my personal information when I pay in cash if it's not something the government wants to know about or wants to have a paper trail to look into (vehicles, real estate, certain very specific items the government likes to keep track of).

Bill contains your name and your contact number which will be liked yo your national identity so yes there are chances to get traced if you are buying expensive gadgets too often but still the chances are less. But in future AI cameras will do the work which you think it can never be possible and its already implemented in China and sooner it will take all over the world so you will have no privacy, each and every activity of you will be recorded.

Maybe he was referring to the payment being done online, when the whole thing involved shipping, and buyer need to give his home address/name for delivery. If you pay this way, tax office can always ask store to provide them with all the information they require, and so can identify anyone who pays with crypto.

Paying with crypto directly in store without any ID or KYC it will certainly not cause any investigation, especially for small amounts. However, it should be emphasized that most of those who accept crypto do it through payment processors, and that the conversion takes place right there, the buyer pays in crypto and the seller gets fiat. However, it all depends on the total amount and capacity of the tax administration to investigate such cases.

This is where a lot of people are wrong about taxes, they think that if it is small enough or won't go over the AML threshold it would go under the radar from their taxing authorities and yes they are right about it but they are wrong about evading their taxes and they are actually committing fraud while doing it. It's always wrong when you are not stating your full earnings during that year and it won't good to no one's eyes except yours remember that taxes are an obligation not some kind of choice where people can choose what amount they just want to pay. And based from your previous post I think you live in the USA and from what I know the IRS is actually strict when it comes to your tax report yearly.

And how would tracing me with a bill work? I go to the store, buy something, get a bill that says date, time, name of the article and price, that's it.
How does that point towards me?

We could be paranoid and say the cameras are there and someone can see my face and recognize me, but that's not a murder case. Nobody is going to go through the tapes to try to identify someone who recently bought a tv with Bitcoins

It is better to keep your invoices with you, we don't know when we need it. I have kept all my transaction history in a CSV format for a safer side.

Second option is to hold 2 years, and then we can sell without paying taxes (of course with proof of purchase), if this is accurate information. Of course there is a third option, quite legal in our country (for now) where we can sell daily up to some 1000 EUR of crypto without ID/KYC in our crypto bank.

Furniture or gadgets also can leads you to traced by the tax officials because you are buying it and you are getting a printed bill means it is getting stored somewhere.So you have to spend fiat as physical fiat in your locale will be good.

Or just go for darkweb where you can buy anything with cryptos but 99% of offers you are seeing on darkweb are fake one.

I am not an expert on these issues but in our local Croatian section of the forum we have a person who has already communicated with the tax office and passed us the official opinion of the tax service on bitcoin or crypto earnings.
The 2 most important things are that we only pay tax when we exchange crypto to local currency and transfer it to a bank account and we pay 12% tax on it plus City tax (prirez).
For more than that it's recommended to find a good accountant.

See Line 21 of Schedule D. It's not affected by AGI. It's a single line item tax deduction, assuming you had net losses for the year.


Yes, the tax code really only applies to realized gains and losses.

I don't have any concrete information on that.  As far as I know it's calculated at the same rate as capitol gains, just like if you made money on investments, and received a 1099-INT for that.


Really?  Is that not subject to being over certain percentage of your AGI?  Also, I think that has to realized losses, such as buying Google stock for $400, then selling it later for $389.  If the stock goes down, but you still own it, the loss has not been realized.

You can deduct up to $3,000 a year in capital losses as a casual investor. You can deduct all capital losses if you file as a business. Before anyone rushes off to do the latter, being self-employed means paying an additional 15.3% FICA tax on your income.

You can't deduct buys because no taxable transaction occurs until you have sold. There is nothing to deduct.

However, if you are required to file Schedule 1 on your tax return for any reason, you now have to answer this question, which applies to buying and holding or receiving giveaways:


They appear to be building a database of people who own cryptocurrency, whether or not you've triggered taxation.

Do you have any good resources for how the tax rate is structured?

I tried to report my crypto purchases this year and last (I do my own taxes) but they didn't care about buying crypto, only selling it for USD.  They consider any crypto sales (for fiat) as income, so they want to charge tax on that.  I buy more than I sell, but go figure, they don't give you any credit for a "loss" or for buying more than you sell.

Right on that's what I was thinking

I think it could be rather beneficial to the community if a in depth guide was made on this specifically for the UK, taxes are typically so confusing, and the wording of these tax laws have always been filled with jargon. I'll have to take a look at what is required. I think with tax being delayed this year, further confusion will be added due to the COVID19 situation.

I've personally been thinking about getting an accountant that deals specifically with crypto cases, as other accountants don't seem to be very clued up on it. Although, I expect this will continue to change, and an increasing amount will become aware.

That's why you walways need to be smart about it. People who knowingly break the law and then brag about it on social media aren't smart.

Spending can also be done in various ways. If you sell your coins withour exposing yourself through KYC and then spend it on gadgets, furniture and electronics no tax man is going to know about it. He is not going to follow you with a camera filming you buying a new macbook or a set of rims for your car. Buy a house and you won't be able to hide it.

It depends on your situation. How you got it, how you sold it, where you live, what's your income. Hiding a sale of 1 bitcoin worth 8 thousand dollars is easy when you earn 50 thousand a year. Much harder when you're unemployed on benefits.

He specifically mentioned selling for fiat on an exchange. The higher the amount, the higher the risk that sooner or later you'd have to pay those taxes + penalties + possibly criminal prosecution. Even if you sell it for cash in person, or via an ATM without KYC, or use it to pay for goods and services, the more you spend without declaring your income/enough income, the greater the target you're painting on your back. Especially if you buy anything that leaves mandatory paper trails such as real estate or vehicles. Traveling around the world to expensive places and posting pics on social media for the world to see (pre/post-COVID19) if one is officially unemployed also isn't the smartest thing to do. The tax office could always randomly (or not so 'randomly') audit you and start asking questions how you can afford a certain lifestyle while declaring little to no income. So be smart if, say, you're officially unemployed but still want to enjoy nicer things. Of course it differs from country to country, but for the developed ones and the richer developing countries that's how it is roughly.


You might be bothered years down the line and be forced to pay with interest and penalties. Especially if your withdrawal is a large fraction of your total income or you trip some other flag due to high spending, having a snitch for a neighbour, etc.

Consult a professional.