Bitcoin Forum

If you are living in the US and want to cash out bitcoins, what is the smartest course of action? In other words how to pay the least amount of taxes and stay compliant with the law?

i don't think there is the expression "least amount of taxes" unless you want to evade, if you want to remain regulated you will pay your % of taxes on the amount that is in play

any exchange will do the job here, or just use localbitcoin

Best way to do this is by using localbitcoins. Go there and find someone to meet in person if you want or national bank transfer. Those two options works best for me. About legal, I don't think that any low denies you right of buying/selling bitcoins

Tax evasion is illegal. Tax avoidance/tax planning is not.
The OP is looking to minimize taxes - nothing wrong with that.

Precisely. Anyone have the best strategy? Traveling somewhere a good idea?

You mean to exchange coins abroad and bring back cash? You would still have to report the cash at customs. The only way this would work is if you exchanged it abroad and spent it all before going back home.
When you don't want to pay taxes, but need to turn coins to fiat, it's best to find someone who will pay you in cash. Just be safe and don't get robbed.

I think theres no other way. Only if you are going to transact with a trusted person to exchange you coins into fiat. As they said localbitcoin is the best and your only way to do that. Other than, you will obliged to pay for tax.

But is localbitcoin safe? I heard some stories that are not so great. Anyone has experiences with it? Using exchanges like coinbase is perfectly safe, unfortunately you can't avoid tax, they do report to IRS like all stock brokers.

Honestly coinbase right now are halving some problem about crediting your balance into your coinbase balance and other problem about credit card user if you can chenk their community coinbase many people right now are complaining about this problem after the price is increase above $1k value and the price was drop the problem was start i just warn you guys to use it right now because my bitcoins was not credited few days ago..
Much better to look for a local exchange or near exchange.. here in my country there is a legal company called coins.ph that actually we can exchange bitcoin into real money without paying tax.. but the rates i think is 5% from the real rate.

You could sell btc and get moneygram or western union? On localbitcoins.

I'm not entirely sure what the law is but would it really make a difference what tax you pay depending on how you sell it?
If you want to keep it legal then selling it for cash one way or another would mean you'd need to report your earnings and pay any consequent tax on that.
If you want to avoid unnecessary fees though you can post on localbitcoins and sell BTC in person for cash.

You remember bitinstant?
They tried to do this on a large scale and got caught in laws of us.
Nobody can do this because of taxation and money laundering laws.
It is not just not possible.

It is possible if you're operating on a small scale.
Just make sure to disclose your earning and keep a record of all transactions as proof for filing your tax returns. It would be best to speak with a financial advisor to be certain but if you play by the rules they can't hold you down...

But financial advisors know anything about bitcoin or how to handle it when it comes to tax season?
I would think if it above $2000 USD they would just treat it like a commodity instead of a currency.
I do not think their are any U.S laws put into place to deal with filing with bitcoin for tax purposes.

There were some people robbed at gunpoint, so if you're doing some larger transactions you'd want to bring your friends. The more money you're exchanging the larger the possibility that they will try to rob you or give you fake cash. Exchanges aren't 100% safe either. If you're unlucky you'll end up like some of the MtGox users. Still, cash transactions are the best way to avoid taxes, but you will still have to pay when you decide to buy a nice car or a piece of land.

I had the reverse of this. I wanted to buy Bitcoin for cash, but couldn't find anyone to do it. Actually that isn't completely true, there are a few local dealers with massive spreads, but I decided they were far to expensive.

btw. by cash, I mean folding notes or a bank transfer during a face-to-face meeting.

It seems to get it done in the USA is just getting more difficult day by day with all their laws cornering you any way you want to go. It seems there is no way to avoid payment of taxes because of the laws over there. But I still think going through the way of localbitcoin is still the best option or if they have a major national forum over there, the way we have same here, I just look for a trusted member of the forum to serve as escrow then make the deal. But things are kind of flexible here though.

please give the taxes .it will be better for the country and you do not have worry all the time of getting caught .the best way to cash out the bitcoins is through local bitcoins .indian nationalities can cash out the bitcoins through the app zebpay,its easy to use.

What percent is too high?  What percent is fair for cashing out?

I think the taxes or fees is depend on the amount of your transaction you can not lessen that because it was already set by all exchange in bitcoin community. I do not know what is the best online wallet can cashout bitcoin to dollar in USA or if there are local exchange just ask how much the amount of the fees need to imposed for your transactions.

There are a number of ways to do this, nearly all of which are to a certain degree convoluted.Personally I prefer to transfer them to a debit card and then I can use that to spend or withdraw as normal.There are a bunch of bitcoin debit cards around and they all serve much the same function but remember you are still paying with a Fiat Currency such as EUR, GBP or USD.There are a number of prepaid debit cards that can receive bitcoin as a top-up method but they are converted to the Fiat currency for use with the card.