For some time now, taxes have been a big question among Bitcoin investors. As Bitcoin was in it's earlier stages, nobody was talking about taxes because the cryptocurrency was under the radar. As of recent, this topic has done a complete 180. There was some talk about the IRS reaching out to Coinbase in regards to their users. Coinbase is the biggest exchange in the United States for trading Bitcoin. As the price has accelerated in the crypto, regulars are beginning to crack down.
According to various sources, the IRS took Coinbase to court and the court systems ruled in favor of the IRS. Even though Coinbase was fighting the issue heavily, the courts stated that Coinbase would be required to report all transactions valued at $20,000 or more between the years of 2013-2015. When it comes to investments, investors are required to pay both short term and long term capital gains. Short term gains usually means when a person buys something and sells it for a profit in one year or less. On the other hand, if somebody hold a investment for more than 1 year and then sells for a profit is required to pay long term capital gains tax. Short term capital gains are taxed at your ordinary income tax level, which can range between 10%-39.6% depending on your current tax bracket. Long term capital gains tax is reduced due to the fact you held the investment for longer than 1 year. These levels are usually 0%, 15% or 20%. If your ordinary tax rate is less than 15%, you could possibly qualify for 0% long term capital gains tax. Now it's important to consult with a tax professional to determine which level you will be paying.
According to MarketWatch, only about 900 users from Coinbase were reporting their capital gains from Coinbase transactions. This is in comparison to 100s of thousands of Coinbase users which is crazy. Obviously this means a very small fraction of Bitcoin investors at Coinbase were following the proper taxing protocols. This is very significant because looking forward investors will have to report their Bitcoin profits as income for that year. This means that individuals will have to properly track their Bitcoin transactions looking forward. If people do not follow proper protocol, they could be targeted by the IRS in the future. The reason for this is because the courts demanded Coinbase to hand over client information such as tax numbers, addresses, names and other client information. IT will be interesting to see how the market handles this movement. The reason for this is because Bitcoin gained so much popularity for this exact reason. Many investors thought they could invest in Bitcoin and keep all their earnings. It is now the impression that this will no longer occur looking forward!
Comentarios