Bitcoin Forum

Hi Everybody,

When getting Satoshi/Bitcoins from the internet in general, could you please tell me whether you have to pay tax to the country you get them from or do you just pay taxes to your own country?

Thanks for your help.

This is actually an interesting question.
I doubt that 99.99% of people dealing with Bitcoin are paying any kind of tax.
Unless you are selling a lot of coins and earning a living from it, I wouldn't worry about any taxes.
(I mean serious trading where you are earning tens of thousands of dollars a year.)

This will depend on the country of origin of the sender and the nature of the transaction. If you are just doing private transactions I doubt that there is anything to tax (however, governments are getting more creative every day). If the Bitcoin transaction is part of a business deal I would assume that the same tax rules apply as would for a transaction with fiat money.

Countries have different taxation laws. But in general I would assume that the location (IP) from where the Bitcoin are sent is not relevant. Relevant is the home location of your business partner. This means if a Japanese sends Bitcoin out of a wallet that is controlled by an European exchange, the deal would fall under the same tax rules as if the Bitcoin were send out of Japan.

ya.ya.yo!

You have to pay taxes to your country. Sometimes, the sender may have to deduct taxes (Tax deducted at source) before sending you the bitcoins. If you are lucky and your country has a double taxation avoidance agreement with the sender's country, you can claim credit for the taxes deducted by the sender.

Thanks everyone for your input! It's greatly appreciated. I've often wondered what people do when they win Bitcoins from a foreign online casino, for example, and whether they owed taxes to the country where those Bitcoins originated, in this case the foreign-owned casino.

Even if someone won a lot of bitcoin in one of these casinos, I doubt they would actually declare the winnings and pay taxes on it.
Most people that win money playing poker online for example never pay taxes.
Add the anonymous nature of Bitcoin and I would be surprised if there was one person admitting their winnings.

That depends on where you live. In the UK there are no taxes on gambling winnings at all.

If you live somewhere where you are taxed, you'd pay taxes to the country you live in. It's your windfall therefore your nice problem to have.

You have to pay tax in your country, and sometimes a fee from the vendor. Some countries do not charge very high fees or no :) ;D

Online casinos can be set up anywhere.... and therefore it makes sense for the operators to choose a tax-friendly jurisdiction.
So you can invariably expect that there will be no taxes owed in the country where the casino has been set up.

Here's a question: US resident comes into some tokens, sends them to Poloniex, exchanges the tokens for btc and then transfers the btc out. Lets say the assets are worth US$500k. So that is US$500k of tokens in, and US$500k of btc out. Is Poloniex reporting these transactions just like a bank, i.e. any transaction over US$10k gets reported? Or any case of potential structuring gets reported? There is no apparent tax gain given nothing has been monetized, i.e. fiat-ized. No fiat has been involved. Yet Poloniex requires all this KYC docs in order to make large transactions like this. Curious ...

In this scenario you would not owe any taxes since you are exchanging an asset to an asset. The United states has classified bitcoin as property, so it would be like exchangin 50 dollars in silver for 50 dollars in bitcoin. Your basis is still 50 dollars in gold now.

Now you would owe tax if your basis is zero on the tokens, or anything less than 500k.  I don't believe you can defer this gain in this situation, although I really only do corporation taxes, so I may be mistaken. But to my knowledge you would have to pay taxes on the gain of the original tokens, then your basis in the btc would be 500k.

Gains on the tokens would be capital gains? I've got lots of short-term capital loss carry-forwards .... basically stock losses. I could offset the two?

It would either be short term or long term depending on how long you held the assets, but yes.  And yes, you could use the losses to offset the gains.

The point of reporting is not just to track tax evasion. It is also to check money laundering.
Plus if there is illegal money (say drug earnings) involved, the government may sniff it out from reports like these.

If they're not doing this now, I certainly think they're gearing up to do it. At the very least I assume they're keeping records in case they're hit with retrospective requests in the future. Who's to say the definition of Bitcoin in the eyes of US law won't change?

Poloniex does have USDT on there. I'm not sure whether that qualifies as just another alt legally or not. They're also rejecting NY residents so they're looking to be compliant.

If I trade my tokens for Bitcoin ... how is it that I would owe tax? Neither of these are money ... it is like trading one piece of art for another: my Gauguin for your Matisse. And by making the trade we've established that they are of ~ equal value. A like-kind exchange with no fiat involved. I think Poloniex owes tax on trading fees, and has to comply with anti-money laundering requirements. As someone mentioned I don't think this is a tax issue until I ultimately convert to fiat ... which could be a very long time.

I'm looking at this reference - it says proceeds from crowdfunding are taxable - see #10 near bottom of article - but then in item #11 says cryptocurrencies are taxable when converted to fiat:

http://www.thefiscaltimes.com/Articles/2013/04/08/11-Surprising-Things-You-Have-to-Pay-Taxes-On

So Ethereum, the DAO, and all the rest paid taxes on their proceeds?? I'm a bit skeptical ...

Meanwhile. I'm not going to worry about taxes until I convert to fiat, or until there is better clarity.

You didn't mention how you came about the tokens.  But yes, you would still owe taxes on them.  Consider this...

You are walking down the street, you find a $100 bill on the ground, you pick it up and put it in your pocket.  You now owe taxes on that $100.  Same thing if you were to find gold/silver/a private key with bitcoins on it/etc. 

If you mined the coins/tokens, yes you still owe tax on them, but depending on how you have it set up, you may be able to take some deductions for cost of the machines, electricity, and other expenses.  That is only if you have it set up as a business though.

Your example was the same as mine with trading silver for gold.  You owe tax on the event.  Your right that 50k of silver is of equal value as 50k of gold, but if you bought that 50k of silver for 30k, you owe 20k of gains in taxes because your base is 30k, but now you have a base in the gold of 50k.  Does that make sense?

i think tax depend upon the platform that is uses by the bitcoiners .
since i am from India i am using paytm wallet ( online wallet) which is free of tax to exchange money person to person and i am using that money directly for shoping and recharge .
if anyone is big trader than we can say he is paying tax to his own country .

Ok ... I think I got.

Anyways, I hate taxes. Lol ...

Yes, American tax laws are f*cked up like you wouldn't believe.  You have it much easier I'm sure ...

in my openion , i think no tax is going in bitcoin . there is only transaction charge that is steal by the ower of satoshi centre .
if you are asking about traders  then i will say they are paying tax to own country .

Here is a good way to think about it, and will apply to just about any country.  If your net worth increases, you will most probably owe taxes on that.

traders are paying tax on fiat currency but there is still no tax on bitcoin because it is not yet legalize by the states, when the states legalize bitcoin then they will be thinking about to impose tax but still bitcoin is tax free.

This statement is wrong on so many levels, please delete it because you obviously have no idea what your talking about and it is just better to keep your mouth shut then to spread nonsense.

Bitcoin and taxes are always so interesting topics for all of us. But I think, so countries collect taxes from the country then must make the bitcoin special rules about bitcoin. And of course the country must also have inventories bitcoin.

but i think there is no tax on bitcoin any where, because no state has yet formally legalize bitcoin, and governments impose taxes only on legal things, but the government do not impose tax on such things which are illegal or having no concept in a state. therefore i do not think so that there is any tax on bitcoin.

and that is the reason that still there is no tax on bitcoin, as countries have not yet given legal status to bitcoin, and there is not to impost tax on illegal things. hope in future state will give legal status to bitcoin and after they will put taxes on bitcoin.

That is so far from the truth it isn't even funny.  In the United States (and I assume most countries are like this) you still have to pay tax on illegal things.  If i go out and sell an ounce of weed and make a profit, I still have to pay taxes on that profit from the sale.  So even though it is illegal (in most states), I still owe taxes on it.  There are many famous cases of this where they couldn't nail the crime boss for anything related to trafficking, but got him hung up on not paying the taxes from the profits.

And furthermore, bitcoin has been classified as property in the United States by the IRS.  So the IRS has taken a position on what bitcoin is, which makes it very clear on how it should be taxed.

tax is another important issue related to bitcoin, but i think this problem can only be solved when bitcoin will be accepted  bye the state, if states are not going to consider bitcoin as legal currency then no one can impose tax on bitcoin.

I think no country has imposed any taxes on bitcoin yet.It is only when you convert bitcoin to fiat,you might have to pay taxes and for that you must contact tax consultant in your country

Taxes are not imposed only on legal currencies. Taxes are imposed on goods, services and anything under the sun.
You can be rest assured that governments will want taxes, even if they don't accept bitcoin as legal tender.

Bitcoin is not yet recognized by the law of my country (and most of the other countries) so I am not clear about how it will be treated in taxation aspects.

There will be different kind of treatment for tax if bitcoin is classified as a currency, commodity or software. At this moment I think we can classify it in the software category.

I have paid tax while converting bitcoin to fiat but that’s not the actual tax for bitcoin, it was levied on the service of bitcoin to local currency conversion.

but i think upto now no country has any rule for paying tax on bitcoin, and the main reason is that bitcoin is still not accepted by the states, so we can only expect tax on bitcoin when the states will accept bitcoin.

Do you even read the posts above yours or are you just trying to get your post count in for your signature campaign (btw I am sending a message to your campaign manager that your not supplying any helpful information and just spamming threads that you know nothing about).

If by, "the states" you mean the United States then you are so wrong it isn't even funny.  Read a few posts up and stop presenting wrong information just for your post count.

in my country there is not tax on bitoin although i am using it for last some years and still i never feel the need to pay tax on it, i think the reason is that bitcoin is still not accepted by the government and therefore there is no rule for these things to impose tax on them.

Collecting taxes is the responsibility of that country/government which or which the particular service is provided and as bitcoin is not yet approved by any government then why will we pay tax to any government? at the time when they will approve it then we will think about that.

Sigh, so misinformed and stupid.  The responsibility to pay taxes is on the people.  That is why YOU fill out a tax form and YOU report what your taxes are. 

Italy has made known its intention to tax crypto exchanges in the country, but people who buy and sell on the exchange site are not required to pay tax.

yes same is the can in our country, in our country there is also no tax on bitcoin, if the government is going to impose tax on bitcoin then first they must legalize it because there is no such law in our state to impose tax on illegal products or things.

You pay tax for your country if you make money from bitcoin
you do not have to pay tax if you just using as a payment method

yes to pay taxes is the responsibility of the people but tax collecting is the responsibility of the state, and it is also a fact that bitcoin is not a legal currency therefore it is no tax on bitcoin and still it is a tax free currency. and when the government will consider it as legal currency then they can impose tax on bitcoin.

The way you are writing that doesn't make sense.  You can't say there are taxes on US dollars because it is a legal currency..  It doesn't make any sense.  There are taxes when you buy something or you incur taxes when you earn dollars.  In the same way, you would owe taxes if you paid with bitcoin...or gold...or silver...or chickens...etc...  You would also owe taxes if you earned bitcoins.

No too that!
Or I will stop using bitcoin if that ever does happen. :-[

i think it is good for bitcoin if the government impost tax on bitcoin, because for putting tax on bitcoin the states have to legalize bitcoin first and consider it as a legal currency and after that they can impost tax on bitcoin so it will be in favour of bitcoin if it become legalize by the states the future of bitcoin will become more bright then .

you pay tax on gold or on US Dollar or on any thing you buy because these are legal and recognize, but still bitcoin is not recognize or legalize by any state, it is just like that you do not pay tax on opium or any other drugs because they are also not recognize by the government are not legal.

The reason why i am using Bitcoin is because i do not have to pay taxes when doing any kind of transaction yet. We only pay for transaction fee when we are doing a transaction but it is only a small amount so it is okey and those are for the miners. If in the future that my country will tax using Bitcoin maybe i will stop using Bitcoin and find another crypto that has no tax yet.

Once again, completEly untrue. You still have to pay taxes on illegal things, in fact, most crime lords/bosses weren't brought up on charges for the crimes they ordered, they were convicted of tax fraud because they didn't pay taxes on the earnings of their illegal activities.

At this point you are embarrassing yourself by showing you don't know what your talking about. You are arguing with a CPA who works for a major tax firm and is the go to on bitcoin tax matters for your clients. I know what I am talking about.

In my experience I have no memory of having taxes on bitcoins I have bought.  I bu bitcoins through banks and there is so little fee but after you have deposited it the bank then will return the fee as rebate.  Maybe they get their tax through some other thing like when we will exchange our bitcoins into currency then there would be a little fee. 

i thinks still there is no place where banks accept bitcoin, or may be recently some banks have started depositing and withdrawing bitcoin but still i have no clear area, if it is so then it will be really a good news about bitcoin, and hope it will really promote bitcoin in society.

yes here is the same situation, i also never hear about the tax on bitcoin, i think there is no tax on bitcoin because still no government has yet declare bitcoin as legal currency, and there is no rule to impost tax on illegal thing so bitcoin is still tax free.

to me still there is no tax on bitcoin, as not a single country still consider bitcon as legal currency therefore they  cannot put tax on bitcoin, as not a single country has the policy to put tax on illegal items.

to me still there is tax on bitcoin, as no country has yet consider bitcoin as legal currency therefore they have not yet imposed tax on bitcoin, but if they accept bitcoin as legal currency then they will certainly impose tax on bitcoin.

yes i am also agree with you, as still no country still accept bitcoin as legal currency, therefore they did impost tax on bitcoin right now but as soon as the countries will accept bitcoin they will also impose tax on it.

There is a courtcase in Estonia, which has influence to all EU member states. It is Otto de Voogd vs RAB. In this decision bitcoin was deemed to be as an "Alternative means of payment" which means, it is handled pretty much as a normal currency from the anti money laundering and financial regulation perspective.

However, for tax it is different and really depends on each different state. Many states tax also assets which are not fiat, some don't. Estonian companies can keep every asset, including FIAT tax-free. In principle, bitcoin has a market value which corresponds to a fiat value, which means that no holder of bitcoin is relieved from tax, if there is any. HOWEVER, the other question is that how much the tax authorities can actually track and enforce the tax on bitcoin and playing around with this possibility is a risk in itself.

The only more super-governmental statement came in European Court of Justice Case C‑264/14 David Hedqvist vs Skatteverket, which set the standard in European Union that selling Bitcoins is exempt from VAT as being an alternative means of payment again.

Bitcoin is not necessarily illegal in Europe and being cooperative with the authorities right now is a way to sustain a healthy business on the area. That, at least, I can ascertain in Estonia.

in present time as bicoin is not yet legalize by any country therefore there is no tax on bitcoin, but i think in future when countries will legalize bitcoin then they will certainly put tax on it and hope with this bitcoin is going to be more popular and become more stable currency.

as bitcoin is yet not recognize by any country there for it is free of tax, but it is a reality that when states will consider it as legal currency then all may be state impose tax on bitcoin but yet there is no tax on bitcoin anywhere.

we do not have any tax on us for having bitcoins but while buying bitcoins we do pay a fess and maybe tax to those companies which are involve in that purchase and that companies do their work to collect the tax so you do not worry for that they will get the tax for their respective country.

i think there is no tax on bitcoin as yet not a single country as accepted and therefore still there is no tax on bitcoin. but when the states will accept it then they will really put tax on it.

yes that is a fact that we do not have tax on bitcoin but the only reason is that bitcoin is still not consider as  legal currency by any government , therefore it in most of the countries people are using bitcoin illegally. but as soon as government will consider bitcoin as legal l currency then government must put tax on gambling.

I've read somewhere about having to file for taxes if you start an ICO in the US? If this is true, does anyone know the details?

but i think we will still play gambling if tax is imposed on bitcoin, as in my country there is no tax on illegal thing, the government has to turn bitcoin legal first and only then they can impost tax on it, and it will be too good for bitcoin if our government turn bitcoin as legal currency.

Its virtually the same way in all country that are yet to accept Bitcoin as currency because literally you cannot not taxed what does not exist and so far Taxes have to do with laws backing it up, then you have to legalize the source of the income first,then you can now then talk about taxing it. Over here, the law is kind of silent about the whole matter altogether and for those who have been exposed to it including myself can get to enjoy it while it last...

may be in some places there are tax on bitcoin but in most of the area there is no tax on bitcoin, and it is free of tax, but i think after considering it as legal currency government must apply tax on bitcoin and then it will not be a tax free currency.

I think at the momentgovernments of many countries simply close their eye to the problem Bitcoin issue and taking tax from them. Because, as I understand it, it is impossible to track that the wallet belongs to you.

but i think if they have closed their eyes on bitcoin then how can they impost tax on bitcoin, first they have to declare bitcoin as legal currency and only then they can impose tax on bitcoin.

Unfortunately that is false. Technically if you found a diamond ring today you would owe taxes on it. At least in the U.S. ALL your income is taxable. No matter what it is or how you got it or what it's worth. Simply ask your tax preparer instead of a random Internet forum.

I thought taxes only had to be paid once you converted the bitcoins.  any insight?

You need to provide more information than that.  What you wrote is too vague to give an answer to.  Also keep in mind that 99% of the idiots on here are spouting complete nonsense and have absolutely no idea what they are talking about.

This was my understanding as well, at least here in the United States.  If you are holding your bitcoin and not selling or turning into USD it cannot be taxed.  It is when you sell for a profit that you would pay tax on the profit.  I would also be interested in hearing the correct answer.

If you don't have a paper trail, don't claim a damn thing.

i can not imagine if government approve bitcoin and then makes people to pay taxes. what will be happen with this? i hope the government which already approve bitcoin don't make any regulation that could make bitcoin not growth.

I do not heard any news that there is government that approve to use bitcoin local but there is a country right now that i heard are using bitcoin locally.
I heard that brazil has 150+ stores are accepting bitcoin as payment and i think there is no taxes using bitcoin instead there is rebate promotion for some stores using bitcoin.. that can help bitcoin to grow in their country,,

The only tax I pay for using BTCs is the wallet transaction fee and the exchange fee to turn BTCs into local currency money. Until now the government isn't taking any part of my money. It's not a problem for them yet, because only few people are using Bitcoins here and the sum isn't so big yet.

You have to pay for a transaction certainly. It is 20 000 Satoshi. Other stuff depends on a country. I guess you have to pay something in GB, for example. But mostly you don't. Better check it here not to have problems:https://en.wikipedia.org/wiki/Legality_of_bitcoin_by_country.

Probably about time I post again and tell anyone who is reading this that 99% of the posts above are so very wrong it isn't even funny.  You owe taxes on any gains you make with bitcoin.  Consult a CPA about your tax situation instead of random strangers on the internet.

Those who think that no taxes need to be paid are about to find out otherwise.  ;)

https://www.justice.gov/opa/press-release/file/914226/download

Orders to turn over all transaction records are being sent to exchanges and software to determine ownership of addresses has gone live. If you are caught cheating on your taxes you will wish you had just paid them. It would have been far cheaper.

There is no tax in bitcoin the fee is not for government it is just a fee for transaction that can get by miners..
I think taxes only is in government. we have a freedom to use bitcoin and some online wallet are giving free service without fee for every transaction but the problem like coinbase you can not use it for gambling activity it is against of their rules..

The US has made a start, but all governments are sure to follow suit. As long as you keep your bitcoins, the government will decide to ignore you. Once you convert it to fiat or spend it, the taxman will start breathing down your neck.

I wouldn't get too worried they are concerned with the big tax cheats and not the small fish like most of here are.  They do not have the resources to hunt down every person that owes the IRS 10 bucks in taxes

Sigh, a couple of good quality posts and then back to utter shit.  It's OK to do because you probably won't get caught.  Real good advice to give you idiot.

Sorry I'm trying to be some what logical and look at what it really means.

Better make sure you the pay tax man his share when you sell those baseball cards cuz the nsa is watching your every move.

Your talking to a CPA.  It would be against my oath to taxpayers and the government if I were to not claim that money.  Because, once again, lets break the rules if we might not get caught, way to live your life.

Just pay tax on your country.
But bitcoin is not legal in many countries that mean you don't have to pay any tax from bitcoin transaction if the country doesn't admit bitcoin as a currency.
Maybe the tax is apply in exchanger. Cmiiw

Sure but the people who are worried about their past transactions getting handed over to the irs are the people who DID NOT file it with the irs the last 3 years.  If they did file and pay the taxes then they would not be concerned about this order or care.

So yeah it's completely relevant to discus if those people have something to worry about, furthermore those tax years are now OVER so it is helpful to talk about who the irs will be targeting.

In US, coinbase and other exchanges will report your sales to IRS, so you'll have a include it in the tax return. There's no way to get around it, it's just like selling stocks, all brokerages give the info to IRS.

Yes, you are expected to report revenue from Bitcoin trading, just like any other.
In EU it's different, they (the exchanges) don't have to report you and usually don't, but if a person is being investigated for tax evasion they may be asked to reveal the transaction details to the tax office.

In USA, Depending on what your doing with bitcoin, if your mining bitcoin you have to pay income tax on every cent you make. Also if the price of bitcoin goes up even 1 cent you also have to pay a tax on that called, Capital Gains tax. In your trading bitcoin, you may require registering for a "FinCEN" as it may be classified as money transmitting. As far as I know, these taxes must be payed based of the place you live no matter where you buy the bitcoin.

I don't think you will need to pay tax when you mine bitcoin. You are required to report tax only if you sell bitcoin to fiat. In which case it is treated like if you are selling the stocks, same rules apply.

You have to pay tax on the mining of bitcoin.  You can deduct things like cost of machines (depreciation) and electricity, but tax is still owed.  Consult an accountant (like me) for further insight.

Really? but how to calculate the value of the bitcoin? at the time of mined? Say I got each day some bitcoins because of mining, I have to record the price that day for my tax purpose? It will be a lot of work.

Technically to be 100% right, you should record the price after each block found with the pool you are using.  Of course that is not going to happen (although would be a great piece of software idea..) so instead I mine all coins to a single address that I dump at the end of each month and record my basis as that.  So you owe ordinary income on that part, then any fluctuation of price when you sell the assets would be capital gains.

I have an issue with New Egg which I believe has negative tax consequences. I have already complained to no avail.

I am looking to purchase more Sapphire RX470 8gb cards after evaluating one. Currently this card from NE is listed at $214 with a free $60 game.

The problem is the way they invoice. For the one card I purchased, they supplied two invoices.

The first invoice takes the card price of $214 and then an obscurely written 2nd line on the invoice subtracts  "a credit" for $60. So the first invoice shows that the net card cost is $154.

The second invoice is for the $60 video game and the total line has $60. Adding the two together and voila, we get the $214 catalog price total.

My complaint to them was that they are potentially hurting any business customer because their way of invoicing shows cost basis of the card as $154 not $214. While the chance of an audit is tiny, your invoice has reduced the cost basis of this card by $60 and you have given me a game invoice for $60. Especially for an order of say five, what is the audit defense against expensing 5 identical $60 computer games.?

Just want to make sure I understand, but you are actually paying $214, but then you get a game worth $60?  So when you make the purchase, $214 is coming out of your bank account?

Correct. $214 on a cc. You are given 2 separate invoices with completely different invoice numbers. The one for $154, is the RX470. The other one for is $60, a "Hitman" PC game. The price on their website for this card is $214. No mention of this weird allocation of cost. The game is some sort of incentive in lieu of a discount. I asked about getting a further discount and no game. No can do.

I wouldn't worry about it.  Just keep a list of your "fixed assets" or if you are choosing to just expense it keep some record of the payment and make sure everything is documented well.  As long as the full $214 hit your credit card, I wouldn't be worried about the IRS not believing you actually paid that amount for the card.

I would keep in mind that, despite what Mr. Trump thinks, you are not a smart guy when you avoid paying your taxes. You are a deadbeat who thinks someone else should pay your bills.

How do you calculate the price? Based on which exchange? Always the same one or maybe the one, which has the lowest price at the moment? Why at the end of each month, couldn't you do it once a year? Aren't you supposed to report gains only when you turn coins to fiat?
There are stances completely different to yours, for example:

I would say you can use any of the major exchanges, as long as you continue to use the same one.  You would want to use the one with the highest price, as that would give you the most basis, but just be consistent.  Would look really fishy to be jumping around all the time using different exchange prices without a valid reason.
So, to answer your second part, think about it like this.  You are walking down the street and find an ounce of gold on the ground and say 1 ounce of gold is currently worth $1000.  You now have income of $1000 that is due in the current year.  So everything is hunky dory, you pay the tax on your fortunate find, but decide to sell the gold next year when the price is $1500 an ounce.  You will now owe a $500 capital gain.
It is the same for bitcoin.  When you mine, you "find bitcoins" that you would owe ordinary income on, and you would need to record a basis for.  When you sell those bitcoins, you will owe capital gains tax based on the appreciated value of the coins you mined.

His response isn't different than mine, he just isn't referencing mining but is talking about buying and holding bitcoin for a period of time.  You won't owe capital gains on the appreciation until you sell it.

Does that clear it up a bit?

All clear :)
My question comes to the fact that I'm used to treating my held coins as not taxable. Sure, you can report how your investment is doing each year, or month, but this means you are monitoring the price and frequently reporting gains and losses, like a trader, instead of just doing it when you finally decide to sell it.

I sell coins over localbitcoins.  So I treat them as inventory instead of as an investment.  So once a month I revalue my inventory and put the difference to a gain or loss account so my balance sheet stays up to date with actual values.

greetings all,,here I would like to inquire about bitcoin,,, if someone had a number of bitcoin is more than 10 to 100 BTC in person and not the company,what concerned required to report ownership to the appropriate government agency?
And is there any standard rules governing the taxation of bitcoin?

This is interesting. The question is how the IRS will know that I mined bitcoin, if no pool reports it to the IRS. Many pools are not even in US, I doubt they will take the trouble to report to IRS, moreover the pool has no idea which country I live.

The IRS will probably not know if you mine bitcoins or not, especially on the level of home mining.  But the question was how you should report your income.  What your suggesting is tax evasion which is illegal in the United States and probably most countries in the world.  Just because the IRS doesn't know about something doesn't mean it is OK not to do it.

It is good topic.
First of all it will depend on the country and the nature of the transaction.

If you are just doing private transactions there is anything to tax, but governments are getting more creative every day.  If the crypto transaction is part of a business deal I would assume that the same tax rules apply as would for a transaction with fiat money.

But for now I think some rules concerning cryto transactions are not described completely in laws.
I mean mechanism and system of laws and taxes has not been completely created.

Please do not give what you "think" because it is not true and frankly doesn't matter.  You need to specify what country your giving your "opinion" about also, because everything you just said above is FUD for the United States, which has actually pretty clearly laid out  how bitcoins should be taxed.

I know some friends report the bitcoin income only when they sell them. They report it like capital gains and deduct their mining efforts/cost etc. But they don't seem to report it after mining, as it seems too much cumbersome.

As a CPA I would advise against this.  They really should be reporting that income in the year it was earned.  If they get audited they would certainly be assessed penalties and interest on the unpaid taxes associated with the mining.

OK Got it. Thanks for the info. But if I buy bitcoin from exchanges, I don't need to report until I sell it right? It should be just like the stock trading. For mining it could be different due to the cost base. Otherwise I don't see much diff.

Yes I agree, if you buy it from an exchange, then your basis is whatever you paid, and when you sell it you will either recognize a gain or a loss. (hopefully a gain, lol).  Although I am unfamiliar of reporting requirements.  For example, if you have a foreign bank account, you need to report that to the IRS with amounts and what not.  I don't believe that is required with bitcoin, but I am not totally sure.

I live in a European country. Here there is no specific legislation about bitcoin and tax authorities apply a community directive of the European Union where bitcoin is a form of payment. Furthermore, the higher european court decided that all transactions, i.e  purchases and sales with bitcoin should be exempt from Value Added Tax (VAT) due to VAT is applied only in good and services with end consumer and bitcoin is considered as an eternally transferable value like as fiat money https://yro.slashdot.org/story/15/07/19/1235203/bitcoin-exempt-from-vat-says-european-court-of-justice

Good to know the rules for reporting tax in US, especially after mined bitcoin we should report, lol. Since I don't mine any more (it's too tough to do now), it doesn't really matter, but thanks to DebitMe and marseille to clarify the details.

people from all over the world are buying bitcoins and no one is paying taxes at all ,maybe the big whales are paying taxes and even they are waiting for the price hike and and when they buy it and split it in such a way that they do not have to pay taxes a lot .

Exchange will probably charge taxes indirectly and sometimes I found an exchanger which clearly stated that they will charge few percents for the taxes. It means not only whales which were charged but also an individual who have the intention to buy bitcoin. Exchangers which have official company in some states also required paying taxes thus they will burden this to the customers

I have a question... so if i cashout 11k BTC in GBP i dont have to pay capital gains right since you get 11k personal allowance per year.  Does it matter what you earn as an income or does income not change captial gains tax?

You probably not in US. In US exchange will report your sales to Internal Revenue Service, it's like selling stocks, you are liable to tax and can't avoid it unfortunately.

Till now government have not declared any thing bitcoin taxes up to now, even with bitcoin casino also the casino owners will not announce the winner to public because government will not tolerate illegal activities. It depends on the country where you are living till now no one paying any taxes to the government who won the bitcoin in casino.

you need to pay capital gay on the amount you earn by doing trading, you will be taxed on the revenue if those 11k are the net revenue than you need to declare and be taxed on that amount

What about if you are a long term investor? and only buy 1 time and sell 1 time? to me it seems you are aloud to cash in 11.1k in GBP per year of bitcoin and not get taxed ?

Vraiment, alors ça je ne le savais même pas

Taxes on bitcoin is actually a dicey area for most governments of the world since its not something that has been with us for ages or time immemorial and this is something facing even the advanced countries in terms of technologies and expertise not to talk of developing countries and third world countries but I see government finding a way around the blockchain technology by getting their own share of the cake by making everyone declare his or her income from whatever means whether electronic or physical with that they get to tax bitcoin in an indirect manner.

How is that any different than the way things are now?  The United States are pretty clear on how bitcoins should be taxed and you have always owed tax on income obtained by whatever means electronic or physical.

Maybe for next time don't be so generic and instead try talking about the laws of your country.  Learn some grammar also and includes some periods and other punctuation :)

it depend on how much you sell per time, there should be a minium under which you are exempt from taxes, but it's not guranteed in all country

here for example under 5k euro per year you don't need to declare anything especially if the funds come from abroad

In US, the bitcoin is like real estate or gold coin or any other assets you own. It will be capital gain if you hold more than one year or income if less. Same rules as stocks for example.

I don't think you understand how capital gains work.  It would be a short term capital gain if under one year, not ordinary income.  But otherwise your analysis is spot on, kind of.  Real estate has some quirky rules under certain conditions, but gold or silver is correct.

Each government will provide some rules and regulation on your spending and on your earnings, if you exceeds the limit you need to pay taxes otherwise you will be in problems. If you pay taxes on your transaction than it is a legal one.

New stuff like bitcoin will be taxed, the government can't miss the money that they can collect. Also tax is nothing but to get money for the government, so they will do the best to get as much as possible.

Taxes are not an impediment us to stay in business, in a real job, you also pay taxes for any business that is run. So we think positively, the tax system doesn't rob a fraction of a percent of our income, but to accommodate and ensure ease in the future. We don't have to always do business in secret, needs recognition to be accepted globally.

What ever it may either bitcoin are gold in either farms you need to pay taxes because you are using it. But i don't think government will charge for minimal transaction, those who are doing bulk transaction might those people should pay taxes to government.

How can government over come this solution? I mean, how can they charge the fee of people using Bitcoin? Bitcoin is anonymous, and if there is a hidden company using Bitcoin, the Government can never find out what that company is and there will be on way for them to charge the fee for those bulk transaction

what is the general consensus for US tax on trading in altcoins?

Ex.
Bought handful of BTC from coinbase back in 2014/15
Have cost basis of this.

Used said BTC to buy several alt-coins/crowdsales etc ...

Hold mostly altcoins now, but BTC value is say 3 times amount of BTC from 2014/15.

Does the reporting need to happen only when I go from alt --> BTC --> USD?

Or when I just go back to BTC? thoughts?   

i am also in favour  of to play tax on bitcoin earning to my government, because states run on taxes and they can provide different facilities to their citizen if they are collected taxes, but still i am not in favor of effect the originality of bitcoin. and i think its look like very difficult for the governments to implement tax on bitcoin while bitcoin remain anonymous.

You will owe taxes when you convert to USD, your basis is the same from when you bought them in 14/15.

Tax should be paid to the country from where we are getting from it!! As tax is being paid because we are using the things or facilities of provided by the country for our sake. so as we are using the coins of that country so the tax should be paid to that country.😊

No, taxes should be paid to any country where they are legally accrued.  I live in the U.S., but if I sell something to another country I could potentially owe taxes there, even though I am not benefiting from the public works of that country.

It is impossible for any gov't to tax bitcoin.
That is the reason why it was decentralized in the first place. ::)
So no one owns it and no one party can tax on it. Period! >:(

Spoken like a true immature idiot.  Have fun going to jail :)

They are taxing it actually, IRS at least is doing it without problem, but it always be true that there will be evasion, but this has nothing to do with bitcoin, fiat world is full of evasion also

from the moment you convert in fiat your traced and therefore taxed if the sum is big enough, i guess for meaningless amount they don't care and probably don't search either, there must be a filled that give them a warning under a certain threshold

Here taxs have to be paid if you are making profit with buying/selling. But if you spend a bank transfer to an exchange and then sell some day later for paypal, withdraws to a credit card, sell to a friend for a SEPA, then you are safe ;D

Theoretically yes, but if I sell bitcoin in another country while living in US, that means that I want to avoid tax, and there's no way for IRS to know that unless the foreign exchange will report it which is not the case.

IRS has more ways of tracking things down than whether transactions are reported to them.

In order to use bitcoin wisely we have to pay taxes on bitcoin. As long as we are paying taxes on bitcoin we will be in safe because even though bitcoin is not legalized we are paying taxes to government. Definitely you can still make more through bitcoin.

The mining fees paid during transactions are the bitcoin taxes or there are other taxes ??

See what every currency we are using either bitcoin , USD, EUR etc on every transaction we have to pay taxes on them. But i hope government will not charge any taxes on minimum transaction, if they do bulk transaction and if they reach to minimum amount than he need to pay taxes on using it.

Well it really depends on the country bro! but really some won't accept tax if you get bitcoin from another country because they actually they don't support bitcoin or they are not fund to bitcoin so they just let it slide for once's and go with the main earning the money in the real world and other countries accept bitcoin as a tax like america they really support on bitcoins and you got a tax if you get or pay bitcoin  in america but really other countries think that bitcoin is not for taxable >.< 

no that is the "taxes" that go to miners, your government have nothign to do with it, you need pay an additional tax when you dump for fiat

but if the amount is not that big, i would avoid declaring, it also depend on where you live

Ya you are right, only the selling of bitcoin to fiat currency and buying to fiat currency is to be shown in the tax. i am from india and their is limit of below 10lakhs to not to show the trades in tax but even if you want you can show as short term income through trading.

Not only in India even in my countries the government will provide some set of rules and regulation, if they cross minimum level they need to pay taxes. Every countries has different set of rules according to their usage when they are converting from bitcoin to fiat currency and when they are converting from fiat to bitcoin.

So below 10 Lakh of trade and earning via BTC in India we don't need to show that in tax ?

i think if government is involving in bitcoin industry then maybe there are any taxes for using bitcoin but i don't think bitcoin user want to pay taxes because bitcoin itself is not controlled by government or the user. so maybe we only pay taxes when we want to make deposit by buying bitcoin and we sending our money into third party and it should have taxes or fee that we should pay.

I have been dealing in bitcoin for quite a number of months now, and I am not bothered about the tax implication because there is no category of income tax that I can say income from bitcoin falls into, although this is largely due to my country of residence but I believe as we have more infrastructures and enabling environment then things might not be the same but until then, I still have to do with my tax free income.

btc is the best way to escape from paying taxes

I assure you that every BTC Tx in the U.S. is now being watched. In the next few years there will be a lot of people in court who thought as you did. Your going to turn your profits into profound losses.

I can tell you what's the case in my country and I'm sure it applies similar in the other countries. As I said in the previous post, in my country you should report every kind of earnings from online sales, google ad revenue to bitcoin obtaining like mining and getting payed like in signature campaign, but rarely anyone does it, maybe even no one but that's the law haha. As I said, that's the deal in my country and possibly mostly anywhere else.

Right now most governments are in an awkward position, they want taxes of course from everything but they can understand or legitimize BTC so easily, so they have some really complex guidelines about earnings in general etc. When they finally accept BTC for what it is, a currency and a store of value they will regulate and impose taxes