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Title: If I convert my dollars to Euros and spend my Euros, do I pay Capital gains? Post by: Elwar on April 10, 2013, 05:27:02 AM Say I am going on a trip to Europe. I convert $1,000 to 800 Euros (assume 1.25Euro/dollar).
A week into my trip the price of Euros jumps against the dollar. Euro jumps from 1.25/dollar to 2.50/dollar. I go to the store and purchase a watch that in the United States costs $1,000 but I only pay 400 Euro. I also spend the rest of my Euro on some great meals and entertainment. Do I need to pay Capital gains tax on the rise in value of the Euro vs the dollar ($1,000)? Title: Re: If I convert my dollars to Euros and spend my Euros, do I pay Capital gains? Post by: threeip on April 10, 2013, 06:08:05 AM Will you declare the watch to customs when you re-enter? (I believe it's under the threshold?)
Also, i think capital gains etc would only apply if you sold the watch, and purchased it for that reason. For a thousand bucks i wouldn't even worry about it. Title: Re: If I convert my dollars to Euros and spend my Euros, do I pay Capital gains? Post by: Elwar on April 10, 2013, 06:20:56 AM Will you declare the watch to customs when you re-enter? (I believe it's under the threshold?) Also, i think capital gains etc would only apply if you sold the watch, and purchased it for that reason. For a thousand bucks i wouldn't even worry about it. I guess I could declare it. Or just give it away. Either way. So, what if I went to a store in the United States that took Euros and purchased the watch there? Same amount as in Europe. And what if it was a really nice $10,000 watch? Title: Re: If I convert my dollars to Euros and spend my Euros, do I pay Capital gains? Post by: threeip on April 10, 2013, 06:53:17 AM http://www.beckertime.com/blog/2012/to-declare-declare-your-rolex/
I guess in the end, you 'must' pay income tax on anything you earn, income tax = cap gains tax for non-salary benefits, so....? Should you commit tax fraud? I don't know ;) Title: Re: If I convert my dollars to Euros and spend my Euros, do I pay Capital gains? Post by: Elwar on April 10, 2013, 04:03:49 PM http://www.beckertime.com/blog/2012/to-declare-declare-your-rolex/ I guess in the end, you 'must' pay income tax on anything you earn, income tax = cap gains tax for non-salary benefits, so....? Should you commit tax fraud? I don't know ;) I guess you missed the point of the question on the Bitcoins forum. How is buying something with Bitcoins which have increased in value different from buying something with Euros after going up in value? I keep hearing about capital gains for spending your currency but have never heard of this when it comes to other currencies. Title: Re: If I convert my dollars to Euros and spend my Euros, do I pay Capital gains? Post by: davidspitzer on April 11, 2013, 01:35:45 PM http://www.beckertime.com/blog/2012/to-declare-declare-your-rolex/ I guess in the end, you 'must' pay income tax on anything you earn, income tax = cap gains tax for non-salary benefits, so....? Should you commit tax fraud? I don't know ;) I guess you missed the point of the question on the Bitcoins forum. How is buying something with Bitcoins which have increased in value different from buying something with Euros after going up in value? I keep hearing about capital gains for spending your currency but have never heard of this when it comes to other currencies. In the US, If you have a gain on a personal foreign currency transaction because of changes in exchange rates, you do not have to include that gain in your income unless it is more than $200.00. If the gain is more than $200.00, report it as a capital gain. Capital gains are reported on Schedule D, Capital Gains and Losses, and line 13 of the Form 1040, U.S. Individual Income Tax Return. For more information, please refer to Publication 525, Taxable and Nontaxable Income. Title: Re: If I convert my dollars to Euros and spend my Euros, do I pay Capital gains? Post by: Hawker on April 22, 2013, 03:52:46 PM Say I am going on a trip to Europe. I convert $1,000 to 800 Euros (assume 1.25Euro/dollar). A week into my trip the price of Euros jumps against the dollar. Euro jumps from 1.25/dollar to 2.50/dollar. I go to the store and purchase a watch that in the United States costs $1,000 but I only pay 400 Euro. I also spend the rest of my Euro on some great meals and entertainment. Do I need to pay Capital gains tax on the rise in value of the Euro vs the dollar ($1,000)? A gain that small would not be liable to CGT. http://www.hmrc.gov.uk/rates/cgt.htm#1 |