Bitcoin Forum

What is going on with the taxes?
If i earn money by mining, or by playing on prime-dice and win and then cashout out to my local currency, then this would be legal? The state shouldn't have tax the money i earned?

Not sure what's going on with the laws here (Greece), but if i exhcange my bitcoins to euros and transfer them to my bank account, i think if the amount of money is big then they will invenstigate where did this money came from.

Well im not so sure that i will be billionaire with btc :P
but this is just one of my random concerns

Considering what's actually going on in Greece, i'm sure they'd investigate any significant amount of money moving between accounts be it related to bitcoin or not.

Would it be possible to cash-out via those Polish Cards linked to bank accounts? Should be able to do this with smaller amounts.

I guess that if you want to be 100% legal you must declare any earnings when you fill your tax return.
Condidering that declaring earnings in bitcoins is not yet possible, you should at least disclose earnings that you converted to your local currency.

There are two types of taxes you need to worry about with Bitcoin.

The first is regular income tax. If you earn bitcoins by mining or doing any other kind of work, you must declare the market value of your bitcoins as earned income whether you sell them or not. In some jurisdictions (I'm not sure about Greece), this also applies to gifts and gambling winnings. You do not have to pay income tax if you simply bought your coins on an exchange (but see below). You may also be able to claim a deduction on any expenses relating to your bitcoin earnings.

The second is capital gains tax. If you sell or otherwise trade your bitcoins (regardless of how you acquired them), you have to declare the difference between the market value when you acquired your bitcoins and the market value when you disposed of your bitcoins (eg, if you bought BTC100 for €2000 and then sold BTC2 for €200, you would have to declare a capital gain of €160, since you bought your coins for €20 each and sold for €100 each, so you made €80 profit per coin). If the market value when you disposed of your coins is lower than when you acquired your coins, you have a capital loss which you may (again, I don't know what the law is in Greece) be able to claim a deduction on.

I'd advise you to consult an accountant (instead of random people on the Internet) for further clarification of your tax situation (especially regarding capital gains tax, which can get quite complicated). As you point out, if you deposit large sums of money to your bank account, the authorities will find out about it, so be sure to declare it correctly on your tax return.

Of course if you speculate / do anything and make money with bitcoins, you have to pay taxes on that, depending on how much you won, and how. You should read something about the laws in your country

Conversions to your local currency are taxable.  BTC gains from mining or playing around on Bitcoin sites probably aren't taxable until you cash out.

But, if you're a business, and you're accepting payment in Bitcoin, then my opinion is that you should treat those BTC sales as if they were cash sales.  The way you do that is pretend that the customer gave you cash, and you used the cash to buy the BTC.  That way you're not cheating on taxes by accepting Bitcoin.

So you are telling that if i draw a great painting, i must decrale its market value as earned income, whether i sell it or not?

actually, until you sell it it has no value. consider bitcoins under the capital gains rules and taxes due when it it converted to fiat. Technically, if you spend the Bitcoins you mined you would most likely be required to pay taxes on the fiat value of what you bought. as long as you keep your bitcoins bitcoins and don't spend them i doubt taxes would be required.

No, because that painting isn't payment for services rendered, which is what mined bitcoins are. They are the payment that miners receive for securing the Bitcoin network. If you receive anything as a payment for services or any other kind of work you did, that's income and you have to declare it.

Bitcoins are a token like a stock. Until the token is sold there is no tax levied. They do fall under capital gains taxes.

For example if your employer pays you in stocks as well as salary, only your income is declared under regular income taxes. Until you sell the stock there are no taxes generated since they fall under capital gains. Bitcoins are no different.

You have flawed logic I believe, Bitcoin is not money.

So what is it? ::)

Just a state in blockchain file, if you dont spend them you cant be taxed, no one can prove you own the private key when mined, or anytime later. It is not money, and only spend bitcoins havethe value of exchanged item

Yes, but still it is money.
And you get taxed on the profits you make with it.

but of peoples not giving taxes on this money which is coming through mining and bitcoins gambling

So if someone pulls off a 51% attack he also gets tax free bitcoins?! That's unfair...

If someone is resourceful and brave enough to pull off this shit he deserves all the BTC.

No taxes. The government does no control it.

Taxes have nothing to do with control. In the US, your stance could get you arrested for tax evasion. ::)

Quite right. The government does not control hats either, but buy/sell a hat and someone is getting taxed.

Reducing taxes will do a good job at reducing the size of gov though

Taxman! (https://www.youtube.com/watch?v=Maz9ddxEQnM&feature=player_embedded)

The best and most inexpensive way I see Bitcoin and taxes getting along is if a flat tax rate is introduced; no more taxing your income, expenses, and existence, just a simple yearly bill.

Depends where you live, but best believe, most jurisdictions want to get their cut. Here in the US, bitcoin gains on trading for instance, would fall generally under capital gains, and more specifically may fall under "foreign currency gains." If not a currency, then we're actually worse off, if you read the tax code.

As others in this thread have mentioned, it's unlikely that you MUST pay taxes on income from BTC, however, you might think about the positive implications such a practice has.

Several national governments are just beginning to examine BTC policy. Of course, taxing BTC (or ensuring that it is taxed if already applicable) is going to be one of their primary concerns.

If you are running a legally recognized business, it would probably be prudent of you to pay taxes on BTC-related profit if only to show that BTC is not a threat to your local government's tax policies and revenues.

Of course, a not-insignificant portion of the BTC community identifies as libertarian or even anarchist and they will probably flame me for this post.

You guys should really consider talking to a fiscalist or a tax accountant, because the opinions in this thread are terribly wrong, at least from my Canadian point of view.

tl;dr as long as you sit on them nothing much happens, but the second you make a gain from cashing out or otherwise exchanging them you are liable.

You just painted with a pretty broad stroke there. I am a financial professional by day.

As far as I know, you don't have to pay... It's best of you ask a tax consultant....

Ok, explain to me how you bypass both capital gains taxes and currency transaction taxes.

Are you getting richer via your action? Yeah, there's a tax waiting for you.

Lol

While advice from forum members may offer insight, you should probably consult an experienced tax attorney. At least in my local area, most attorneys will answer brief questions for free. If not, you can always visit Avvo and see what the lawyers there believe. I asked my attorney something similar some time ago and was surprised at the answer.

That is good advice. I would add that even a tax lawyer may respond to your question with "WTF are you talking about?" This is all new stuff. But whatever shakes out, you are going to owe some taxes if you sold bitcoins at a profit.

no tax !

Well, bitcoins mined have a fair market value at the time received. If there is a difference between that value, and the value you sell or exchange them for, pretty sure that is capital gains.

As others said, always good to seek the advice of a real attorney (which I, and presumably we, are not).  ;)

Beware the tax man! He's coming for you!  ;)

i'm too poor to pay taxes.  :-\

Just as a joke: ain't nobody got time for that sh** :)

If you sell bitcoin to buy fiat and turn a fiat profit doing so, then in many jurisdictions this is called a capital gain and may be considered taxable. The State might not actually force you to pay any tax on this gain, though, since it depends on the jurisdiction in question, the amount of the fiat gain, the duration of the original investment, and so on. There is no simple black and white answer.

Those hell bent on evading taxes (morally, I have no qualm with them) won't be asking these questions, since they will do everything they can not to pay, and that doesn't really have much to do with bitcoin. If the State calls something tax evasion, that applies whether bitcoin is involved or not.