Bitcoin Forum

Hello,
The new taxes on bitcoins are confusing me.
I live in the US and I mine bitcoins.
I am 13 years old. (If that helps)
Do the taxes follow normal US tax rates?
EDIT: Is there anyway to bypass taxes? :P

If you are talking about gains (you bought at $20, now its $135 - your gain is $115), then not legally. For my own taxes, I consider Bitcoins to be property. If you sell or exchange that property, whether for other goods or currencies, you have to pay a capital gains tax if you have gains. This is the case for nearly all property in the U.S, except for a few exceptions that are defined in the law, like Collectibles, which have special tax rates. I have not seen any evidence (like a law or tax regulation) that Bitcoins are anything other than regular property.

There are some who believe that if your intent was to use Bitcoin as a currency, then any gains you made should not be taxed. I have not seen any evidence to support these claims.

By the way, you said "new" taxes. There are no new taxes as far as I know.

That said, I am not a tax expert so you should do your own research and draw your own conclusions.

EDIT:
I'm sorry. You said you are a miner and I didn't notice that. That is a different story.
My best understanding would be that if you have no expenses to deduct, then you consider it property acquired for $0 and report gains accordingly.
If you want to deduct expenses, report the bitcoins as income using market value when you mine them minus expenses.
Later, report capital gains when you exchange or sell them with the cost basis being the market value when you mined them.

Again, I am not a tax expert so you should do your own research and draw your own conclusions.

Here's what I'm going to do.  I'm an adult U.S. citizen.  I file taxes every year.  I'm going to present the situation to my accountant.  I'm going to claim my ASIC miners as a business expense.  With that said, I'd need to set up a business.  I'll present the situation to my account and see what she says.  Of course she'll probably have no idea what to do.  Will probably just claim it as gambling winnings or something.  Gambling winnings is an excellent way to claim it, although high tax %, you'll be covered. 

If you're a minor, you may need to go through your parents.  Or you could take a chance and use a mixing service online.  Then take a trip overseas, set up a foreign bank account.  Albiet most won't take U.S. citizens anymore.  So in that case, renounce your American citizenship and live large overseas.  Donate your ASIC miners to cloudhashing.com in exchange for a couple of contracts, assuming you already have an open contract with them.  Live off bitcoins all over the worlds hoping America comes to its senses some day.  Oh, and live happily ever after.  Oh, and buy more gold..then bury it...then forget you ever read this thread.

jk (2nd paragraph) - serious on first

Or use bitcoins to buy property overseas, in some tropical country where are no taxes for income received from abroad.

I have a small business but I don't have to declare income until I earn a certain amount in profit each year. Until then it is considered a "hobby" which remains "untaxed". Then I can claim any losses from the preceding three years to reduce the amount payable - if any.

Do 13yr olds have to pay taxes???

Since you are 13, if your only income is from bitcoin, you should be fine. As long as you do not earn over $6100 in total income (standard deduction) you owe no federal tax, and are probably not even required to file.

Taxes? I wouldn't pay them if I were you. The government doesn't do a good job managing the money it already takes from people.

If nobody knows about your bitcons, just do not bother with taxes. In US you need to pay taxes only if your income is exposed somehow to officials.

Yeah but I think he's worried that his BTC will somehow be exposed to officials.

I just read/heard somewhere that any gains made trading BTC is considered capital gains.

How about in the case of a slightly more advanced civilization (let's say by 1 year), I am paid 100% of my salary in bitcoins. However, I just got paid 5 BTC for a month of work when btc prices are at $1000 in bubble #3. Next month bubble has popped and we are to $500 all the way to tax-day. Do I pay tax on the $1000 rate or the $500 rate?

First in first out.

Purchase:

#1 $10
#2 $10.3
#3 $10.7

Sale:
#1 11.2
#2 11.7
#3 12.4

$1.2 profit
$1.4 profit
$1.7 profit

Or
buy 10 for $100
Buy 2 for $99

Sell 11 for $110
You made $10 each and $11 for the one.

You have to sell the 10 before you sell the 1.

You only have to pay (if you have to pay on btc) if you cash to fiat. You can get paid $100,000,000 in BTC, and you never have to pay a cent, until you cash it.