Bitcoin Forum

Here in my country which is now an upcoming tiger economy (though we are still classified as a third-world country), we are free to participate in Bitcoin both buying and selling as the government is treating Bitcoin just like any other foreiign money.

However, I am sure that only a very, very small fraction of us are declaring our Bitcoin income. It seems to me that the government is not that interested to get strict with individuals as long as they can tax the Bitcoin exchange provider for the service rendered.

I am then wondering the situation with other countries. Can your government really be able to track if you never declared gains made from Bitcoin transactions?

Bitcoin is very trackable. But the thing is how do you decide whom to track? There is no good automated way to do it. Bitcoin is out of the purview of any country really, and should be treated that way. I wrote some about it here (https://www.blocknebula.org/taxes-the-cryptocrippler/).

If you convert Bitcoin to fiat, pay income tax on it if your country has income tax. Simple.

Bitcoin ATM's bring up some legality concerns. Technically you are selling them for fiat, so you should also pay taxes like it's income instead of like it's a bank.

I'm in the United States. That's how it is here, as well as pretty much anywhere. It's just a question, is there income tax?

Your government, like every government in the world is monitoring all bank transactions, that's enough for now. With time and effort, I'm sure a government could also monitor the blockchain, but I guess this isn't a priority as of today. The European Union is already talking about it, though.

For the advanced countries, I think tracking wouldn't be as hard as it it sound but for third world countries and developing country, they have more issues to tackle than handling bitcoin or giving it attention to a high level. They will even appreciate you for declaring that little willingly rather than spending more money chasing after you to get that little from you. For you I would say it won't last long but for now, enjoy your tax free income pending the time they will be ready to face you.

The government may not be interested in checking your cryptocurrency transactions for now, but they may not ignore it for ever. The IRS decided to go fishing into old coinbase records dating back a few years suddenly. There is no surety that your government might not do the same.

Coinbase needs to be paying corporate taxes. Not the users.

If Coinbase sells you Bitcoin from their own accounts that is income they have.

If you sell Bitcoin to Coinbase that is income you have.

There is no reason for the IRS to be beyond the gateway world since taxes cannot go to protecting any basic rights within the crypto realm. They hold no purpose besides people foolishly asking the IRS to take their money.

No problem,The government may not be interested in checking your cryptocurrency transactions for now, but they may not ignore it for ever. The IRS decided to go fishing into old coinbase records dating back a few years suddenly. There is no surety that your government might not do the same.

Unless you convert your Bitcoin into fiat and transfer it to your bank. Government isn't involved at all. You are taxed on the gain you made that are calculated through fiat amount. Nobody is interested in your Bitcoin movement over the internet.

I convert my bitcoins to fiat and if my income (in terms of salary or interest) exceeds the taxable income, I anyways have to pay taxes and now I too pay my taxes. I have verified my exchange accounts too and hence my transactions can be easily tracked but since there is no such rule/law for bitcoin transactions, it is still not clear how much extra I would need to pay as tax. The Government in my country is still setting laws for taxes on bitcoins.

Kinda. They will certainly care if you "you convert your Bitcoin into fiat and transfer it to your bank", its both the bank and the governments job to care; esp if the transaction is over a certain size. But since you can buy thing with a fiat value via bitcoin; I mean you can buy things that can easily be converted to fiat (consumer goods, precious metals), they also want you to record and report those transactions as well. Essentially, if you convert your bitcoin to any real world asset, it would need to be reported. Fiat value isn't the only measure of value that a government considers. ;)

It depends on whether you bank it. I'm in the UK. Any unusual amounts will be reported and on top of that if they discover you're using your bank account to buy and sell they'll shut it down.

If you were all cash then I can't imagine anyone's ever going to find out. Not a great deal you can do with cash these days though.

That is precisely the government's fail back mechanism. A lot of people still pay their taxes, even if it is cash or crypto. The day crypto currencies start circulating in the economy (without the need for converting to fiat), the government will lose its monitoring mojo.

The government doesn't have a full control over bitcoin. And I guess the goverment cannot imply taxes on bitcoin since it has nothing to do with it. And they are not even aware of the list of people who use it. We are free and anonymous. If the government would legalize bitcoin. Probably they can have taxes in bitcoin users. But so it requires so much process.

You can sell piles of your own dung and the government won't be aware of it and has nothing to with that either. If you're making a living out of selling piles of your own dung then tax is due on it. Anyone's welcome not to tell the government about it. If the government finds out they'll nail you to the wall.

I also live in a third world country and progressing right now and we do have the same situation. Our government is not implementing taxation as of now for at this moment no law is been passed about bitcoin. But we are not likely anonymous in here who do also recognized by our central banks and businesses we're opened on many stores and banks to transact. We have freedom.

Well i think because there are no employees or other terms related to it. Income also would mean it comes from the government and you have certain id to track your employment. Plus there are taxes on those. Our bank stated that they support btc as a means of transaction but i not as payment so i guess those are different. I tried stating btc as my source of income but the embassy did not accept so i have to show them my wallet and many sites to open just to give them some clarifications.

Tax auditors are especially proficient at finding undeclared wellsprings of wage. The most effortless path is to just survey your bank explanations amid the period being referred to for store action irrelevant to your proclaimed wellsprings of wage. In the event that you work together on any of the enrolled trades, you will escape on your stores and withdrawals. From that point onward, the reviewer will survey your financial records to perceive what you obtained and how you paid the bill amid the review time frame and the months previously, then after the fact. Did you purchase something pleasant and after that compensation utilizing an undeclared ledger or clerk's check? Your financial balances will likewise be surveyed to decide if you have other undeclared bank or charge card accounts.

 Next, other government records will be questioned for enlistments of real buys, for example, property, water crafts, air ship or autos, and global travel. In the event that you are under scrutiny for criminal duty misrepresentation (which you may be on the off chance that you determinedly documented a wrong return), at that point your companions, neighbors, associates, and relatives might be met for extra leads with reference to how you may have discarded undeclared pay.

Not deciphering a bitcoin income is a good idea, even if we declare I'm sure not everyone will believe, maybe only people who understand the world of cryptocurency will believe it.

I want to ask you that, what you mean by third world country ? There has been misconception among the western countries regarding third world countries. They think that all the third world countries are poor. During the cold war the countries associated with NATO were considered as First World countries; countries associated with Soviet Union were considered as Second World and those who decided to be non-aligned were considered as third world. I agree most of them are developing nations but at this moment, many third world countries economy is much stronger than many European countries, still the west is living in the past.

If we talk about the bitcoins, then Asia region is leading the overall bitcoin market and many 3rd world countries are boosting the bitcoin market. If government regulate the bitcoins then they have right to collect the tax if earned from bitcoins related business. Its new for them as well so government would take some more time to make strict law related to cryptocurrency.

At the moment the IRS can only monitor bank accounts. So if you never cash out, then you're good

In my country,  bitcoin is not yet regulated by the government,  so its not taxed.  But when you convert that and cash out,  its not bitcoin anymore. so suggest to pay tax when bitcoin is cashed out, that is to avoid any problems in the future.  If you earn a lot in bitcoin and your current job cant warrant what youve earned,  you might be subject for investigation. It might not happen though but if you are a law abiding citizen and just want to avoid trouble,  just declare your btc income.

Would they have ever done that without the spectacular BTC price increase in the last months?
If the market cap of BTC would still be under 10 billion $, they wouldn´t have started cooperating
with blockchain analytics companies in my opinion.

That's better than any other country,, it might be considered as a passive government as long as no criminal activity that may controversial that used bitcoin.. I think government and your country would not bother that freedom your experiencing as of today.. As my country is concerned we do have almost the same situation but differ on government regulations on some transactions and exchanges..

I agree with this. Government is too busy tackling other matters than chasing people who earn income from bitcoin. There are even those that are working online for a decade but do not pay taxes because the government is busy in other matters and they are more concern to those people who earn big like celebrities and doesn't pay taxes. They are their first target so if someone is popular, make sure you pay taxes because the government will have a lifestyle check and then check if you pay taxes properly.

People who earn bitcoin in developing countries should enjoy it for now because once the government realize the potential earnings in bitcoin then maybe they would concentrate more on people earning from it so it would not be tax free anymore.

Yeah when we start having self proclaimed millionaires popping up all over the place the government will start taking a harder look at this stuff. Where they could be losing millions of potential dollars.

Of course, we can be under the radar of the government (especially with the tax collecting agency) if we announce (by words or actions) it to the whole world that we are making big money with cryptocurrency or anything online. I prefer to have a discreet lifestyle so that no one can be spreading rumors about my riches. We should not put a challenge against the powers-that-be.

     Here's the kicker,  if you never plan to cash out, then whats the point in holding any coins at all? Doesn't that defeat the purpose? Will you just hold for the sake of holding? Do you see the dilemma we all face now? It's quite a contradictory situation we're in, by having any coins at all. Up until a few years ago, bitcoin was really operating within the gray areas of law (which varies from country to country).
     The governmental bodies, and regulators across the world aren't completely against the idea of Bitcoin, and its methodology on decentralization, because if they were, they wouldn't have issued any guidance whatsoever to help people. They would have just outlawed it entirely (all things crypto coin related).
        We live in a digital age. To completely issue a cease, and desist on all operations concerning Bitcoin, and Bitcoin related developments, would be to smother the searing flame of human innovation. Especially when our future as Mankind depends upon it. When it comes to worldly affairs, other countries usually wait to see what the U.S has to say about anything first. Though Bitcoin wasn't exactly green lighted, guidance was issued in order to take some of the stress of early pioneers, do to the fact that the technology behind the coin, is simple, yet highly innovative, solving many real world financial problems, with many reputable organizations adopting blockchain technology.

In my country there is not yet legislation on bitcoin, so no taxes can be charged on those incomes. Off course I would have to declare the incomes when making any exchanges. But anyway for the moment I'm just keeping my bitcoins as an investment.

It's very difficult to find trusted sources about taxation and what we have to declare or not.
What seems logical is to declare it. If you have a certain amount that you convert into fiat, anyway you will be asked by your bank where does it come from.

In France, for example, there is legislation on cryptocurrencies
if you have a capital in cryptocurency you must declare it if you change it in classic currencies. if you store it it is not taxable
here.
In some countries, notably in Africa  :-\ :-[, there are no laws surrounding cryocurrences, in this case, free to everyone to possess them without declaring them;), some countries prohibit such currencies ...

The banks and government depend on monitoring bank transactions. I wonder how long that's going to be.

Once bitcoin and altcoins get incorporated into investments firms and real world assets, I wonder how the government is going to navigate that...

The government's incentive to allow Bitcoin would be to regulate it. One day we'll all have to own up   :(

There are many reasons to have bitcoin, not the least of which is protection from the IRS.
But also as an investment to hedge the devaluations and inflationary aspects of fiat.
As far as spending liquidity goes we are seeing many interesting tools/coins evolve; LTC, ETH, DASH, XMR, ZCASH, STEEM and some others.
With the BTC as the "gold standard", so to speak

I think these secondary currencies will evolve to meet the various liquidity needs of smaller markets.

I would think many "investors" out there are like me who hold a porfolio of these alt-coin in wallets which support multiple coins.

That's because you can double spend good ole fiat. The problem doesn't exist with Bitcoin and most cryptos. There just isn't the need for the same regulation and oversight, especially when anyone can look at the blockchain.

Hm, how exactly do you double spend fiat? I thought that was the problem unique to the virtual currencies.

More than 9/10th's of USD is "virtual". Banks do not have a dollar bill (note, or coin) for every dollar they "have" in their accounts. We're talking at least 90% of the USD has no note or coin to represent it. There just is no reason to have that. Coin and note go through fluctuations where banks try their best to predict how much they'll need, which comes and goes from them.

When Bank A sends money to Bank B, Bank A needs to mark it off their books or they are "double spending" (they could also claim they sent it to two different banks). The US uses clearinghouses as a third party to verify that these things are happening correctly, without creating money out of thin air on the books ("double spending"). This is happening constantly as every single debit and credit card is used, on top of other banking/money service activities.

ON the other hand, any sufficiently decentralized virtual cryptocurrency cannot double spend. That's literally the first thing in the Bitcoin white paper. I highly suggest you read this (https://www.blocknebula.org/introduction/) in order to understand a bit more, and the link at the end (https://www.linkedin.com/pulse/blockchain-absolute-beginners-mohit-mamoria?trk=eml-email_feed_ecosystem_digest_01-hero-0-null&midToken=AQHF2RTnQGLwdw&fromEmail=fromEmail&ut=3hUVRgNUR7i7Q1) of it is very good for a slightly technical understanding.

I think he just means the dictionary definition of a double spend. But yeah, fiat's version of counterfeit/printing money is way, much worse than crypto

I understand the above arguments. It's just that I don't think the double-spend risk is that big of a problem for fiats.
The blockchain currencies have a technological advantage of transaction processing/recording. I think what's going to happen is that we will see a symbiosis of the traditional financial world and virtual currencies.

That is where you are wrong, the moment that they see that you have uneven wealth which is not in proportion to the income tax you pay they will start to wonder and do some auditing of your income report. Most of the government don't care where your earnings come from, the important thing is that you will pay all of your taxes that is right for your income (also including your income from Bitcoin). The moment that they also find out that many people are hiding their Bitcoin income the chance of having laws related to Bitcoin might be high.

Amen. people dont get that the only advantage of a blockchain is that it is an immutable record. if you dont need an immutable record, essentially, a special type of the very common database, there is no need for a block chain. if you dont need consensus, just a record, then its actually a waste of time. for certain industries, a blockchain might improve operation (delivery, insurance, and obviously, payments) as these benefit from having community consensus.

for everything else, a block chain is just painting the lily, so to speak.


to get back on topic, fiat has solved the money issue elegantly for quite some time. i dont think the problem is with fiat, its with how we handle and distribute fiat, socially. we dont, and it doesnt seem to trickle down very well ;)

Well, it depends on what you mean by “income”. As other have said, governments are able to track your income when you convert BTC to FIAT but they aren’t able to track your balance in most currency exchanges. They are not able to trace if you have paper wallets or hard wallets either. In my country, the law states that you don’t have to pay tax unless you convert cryptos to FIAT. They are taxed as stock investments: you don’t pay until you sell because you may lose all your money.

It is highly unlikely that they will be able to catch you if you use BTC to buy goods or services directly, or if you use pre-paid debit cards for example.
If you don’t declare your income, IRS may get you but, in my country, they have four and a half years to catch you, otherwise they can’t prosecute you.

Summarizing, governments can track some of your bitcoin income but there are different ways to avoid paying tax.

However, I advise you to pay taxes so you won’t have to worry about getting caught.

Yeah like how the Shaun Bridges Silk Road agent got caught stealing a million worth. But I am sure they will start using services like Chainanalysis to try to track people, it is a public ledger after all.

Outside of the crypto world, most people who want to avoid taxes don't actually avoid all taxes. They just hide part of their earnings. That would be my strategy with crypto, with the added advantage that you can easily store cryptos on paper wallets without needing intermediaries, aside from coin mixers. So basically buying stuff directly in crypto when possible, converting through an exchange or ATM other times, and paying the necessary taxes on those transactions. If you're very careful to separate those two ways of doing things, you should be good.

Hide those paper wallets well, though. If they're as easy to find as wads of cash under your mattress, that's not good.

A rich girl in my country just caused her parents a lot of grief by getting caught with drugs on her. The police raided her home, meaning her parents' home. They didn't find more drugs, but they found millions of euros in undeclared cash !

in my country also not so interested in bitcoin because it is considered not as a means of payment, maybe the situation in my country is not so far different from your country about bitcoin and I do not think my country can track him about the bitcoin profit transactions I have.

I think for now bitcoin is not too popular in your country but time will comes that more peoplw will discover and earn in bitcoin the most important is you have an advantage to them which is you are earning right now and able to collect more bitcoin than them.
Here in my country lots of people are earning in bitcoin, here in my family me and my wife are earning with bitcoin and lots of our friends and best thing bitcoin is not regulated by the government that is why all our income has no tax.

today In my country there are many people join with bitcoin, among of them make bitcoin as extra income, but some even make it as the primary job and really main income of them only comes from bitcoin. This happens because they think bitcoin to give something bigger than their work. and when we talk about taxes, for now there is still no official regulation from the government that regulates the bitcoin circulation in my country, so bitcoin is currently still free from the tax.

yes the transaction here in philippines are able to track but no tax in our own money and we dont have problems in exchange with low fee,i think its better also that we have government certification in bitcoin in every country

In Germany, too, there is no official recognition of bitcoin but this only occurs until you have not purchased the bitcoin to Euro to buy something, this amount is considered your income and you are required to pay the tax. I think the same situation in most countries where there is no outright ban on bitcoin.

This is phenomenal that you do not have to pay any tax on income earned from bitcoin. Is that government do not take any tax on income earned form various sources or only it is for bitcoin? I think every country whether legalized or not collect taxes or individual has to pay tax if they fall in respective categories prescribed by govt. in their country.

Until we only use bitcoins we are out of reach of tax authorities. Government will long sit as the dog in the manger. To accept bitcoin they can't because to lose power. Not to accept bitcoin, they also can not because the capital to run to where the access is allowed. It is better that black capital work for the country than it will be to support the economy of another country.

Did you guys check out the congress hearing about bitcoin a few months ago? I remember they brought in experts and tried to understand it, then kept asking "How do we regulate it, where is the pressure point??" to which the experts would of course reply "We can't" LOL

Tracking the profits of a particular citizen from operations with crypto currency is very difficult, almost impossible. However, the investigative authorities for a number of transactions and other indirect evidence, in principle, can in some cases identify a specific person and prove the failure to pay taxes to them. However, this is extremely rare. As a rule, this can not be proved. However, if the data of your purses enter the hands of the investigative authorities, it will be easy. That's why these data must be kept in strict secrecy.

It is difficult to track the indenity of which money comes. No country can do it

I honestly think taxing citizens' Bitcoin income is basically going to be an honesty system. How are you going to track those coins when everyone can create a different wallet for each transaction? There is an Achilles heel to this system though, and that would be the exchanges. You can easily be taxed by buying or selling through an exchange. Bitcoin isn't accepted everywhere yet so this could be cumbersome.

Yes. I'm sure they can. I've seen sites that can track how many txid addresses are connected to that owner and how much is his total btc.

This could come in picture going forward as you rightly said its a public ledge. They can create some algorithm and try to find out the amount sent to which address, which address own how much btc etc and then they can track who owns it etc. This may be difficult in beginning but somewhere it could be moved in this direction.

The only way to be safe is to use coin mixers and hope they don't get compromised.

Maybe use several different services in a row.

Even if you use a coin mixer in order to obfuscate the source of your Bitcoins you
still have to face the problem on how to convert the mixed BTC to fiat money.

This step is much more difficult, because exchanges require KYC/AML verification,
localbitcoins and other options to trade in real life are dangerous and not really anonymous
(e.g. you can run into a covert tax investigator). Bitcoin debit cards may be an option,
but even these require KYC/AML verification for midsize amounts.

If you are depositing unexplained FIAT in a bank account, the government might get involved, even if it is only a few thousand USD-worth per year.

If they see a suspicious activity in the account then they might investigate it further. As far as I know, banks focus more on accounts that has deposit of large transactions on a regular basis or a one time big time amount. If you only deposit a small amount then banks would not bother in your account. If someone wanted to get away with bitcoin income then he may want to separate his deposits in several accounts or just declare bitcoin income if you don't want to have problems with it.

Only if the government directly establishes income tax on profits from operations with crypto currency, payment of it is mandatory and entails a certain responsibility. If it is not, then this is a voluntary matter. This tax can and do not pay.

Well in my country's case, my friend interviewed the lawyer at our Central Bank and they said that bitcoin is treated as property, therefore not subject to legal tender. Applying your situation, it is indeed impossible to track down bitcoin transactions by applying its decentralized nature. The government also does not want to interfere yet involving some transactions because their are only a few number of people who know bitcoin. Currently, it helps the economy by making it liquid and by increasing the money supply on the market.

To adopt a law on the taxation of cryptocurrency transactions, governments should recognize their currencies and open up their state accounts for the payment of taxes. Users do not always change their coins for Fiat. Once cryptocurrencies will be recognized as state residents can opt out of the national currency and it will be a nightmare for the government. So I think crypto-currencies will not be recognized for a long time.

This is the one reason why nations should legalized bitcoin because they will gain bitcoin income tax in which a little bit frustrations to some bitcoin enthusiast because there profit will be deducted but i think this is fair because income thru fiat was tax collectable too. All tax imposed by the government are good as long as it was used for the welfare of their people that is why they should be honest in declaring bitcoin income but if it will just to be stolen thru corruption that is bad and I'm against it.

I suppose it is not easy to regulate something that is virtual because mainly they cant track whoever own how much. It is still better to tax it if ever it is converted or let the government connect to entities that are using bitcoin in their services.

You know at least one state which honestly spends collecting taxes. It's even funny to read you say that is very good if the government will not interfere in the Affairs of the bitcoin community. I want to tell you that the idea of creation of bitcoin was that people do not trust the government and want to create its own independent economy. if you like to pay taxes to the thieves refrain from bitcoin and use Fiat.

Tax evasion is a serious issue that central authorities are facing with blockchain payment. Govt. still looking for the solution for this prob. You need not pay any taxes until you convert BTC to your country official currency. But what if you never convert it!!! Crypto-enthusiasts start making transaction in BTC that lead to no transaction proof hence no tax.

If I'm paid the yearly tax , usually my government will ask where are the money come from !?
So If I'm not report them in this year, I will got penalty for next year ! There is another way by not convert bitcoin into fiat for 1 year or convert bitcoin and try to purchase gold / diamond

You mentioned that 1 year rule. Are you by chance from Germany? I'm asking because it's probably the only country with a 1 year investment rule.
If you're spending your coins on small things it's still possible to avoid paying taxes, because there's no way to track in store transactions. It's possible (but hard) to ID you through the place an online purchase is being shipped to.
If you have a lot of money to convert and want to avoid taxation you can try selling it for cash (more risky) or moving for a while to one of the tah haven countries and getting a bank account there.

I read somewhere that in the US, the SEC proposed a bill to monitor all activity of people's crypto portfolios

I think there is not need to disclose your income in bitcoin since it is decentralized currency it will not be subject on tax declaration.
Here in my country lots of people are now earning in bitcoin but no one state their source of income, how much income they generate annually because our government is not yet declaring it legal currency in our country but they do not banned bitcoin because they know that it would a big help to lessen the poverty in our country.

yes I think if the government still doesn't declare bitcoin as a legal currency they certainly don't have the right to regulate taxation about bitcoin, and I think it is appropriate that they support bitcoin to continue to grow because the function of bitcoin is very good for the economy of users who experience better financial changes and able to reduce the unemployment rate in this country.

I agree with you and I think this is not just for Bitcoin for some investment instruments as well. Example in real estate selling or renting, if it is not that big of a value, the transaction mostly is just personal and the government can not track it.

And the government is also less intersted in our country because only few are using and investing in Bitcoin for now. But sooner or later, as the Bitcoin continues to grow also in our countrt, the government might take some actions to also get a cut from the earning of Bitcoin.

Not sure where you come from, but in most well developed economies declaring your income, revenue, profits is a must  ~ people however aren't doing so, which is another subject.

And that in countries where Bitcoin isn't declared a legal currency or asset or whatever. In reality it doesn't matter what you buy or sell, paying tax is something basically everyone is subject to.

And how exactly are people in your country earning Bitcoin? Is it them joining signature campaigns, or are they actually working for their money? If we're really precise, then even signature campaign earnings could be taxed.

They can't tax the earnings that you are getting on signature campaign until you converted it to your local currency, but as long as it is in crypto currency no matter on which coin you traded it they can't tax it. In the future tax schedules will be implemented for this currency.

Our Govt is full strict against bank accounts, even they ordered to put identity for phone numbers. Still Bitcoin is new here however Government is monitoring it and might looking to put large taxation for customers.

You know our Government had requested PayPal not to keep funds in PayPal accounts and am thinking they do same thing with Bitcoin.

If more people uses, then every Government will arise for taxes, if not then they impose Ban on Bitcoin.

But unfortunately only the government knows if they are going to investigate an account, there will always be some measure of risk unless you 100% comply with a country's declaration requirements.

I think my country doesn't care anyway if any individual here in our country owns many btc. As today, we are free to earn as much as we could without declaring it. I believe that it would 2-3 years before our government will take legal actions because the increase of btc users here is very slow.

As of now my country has no question about the legality of BTC transaction seems like fiat that you can cash out money in any bank, but yes legalization of BTC is somehow one of the best option for us to declare our income to the government for taxes, because what I seen if we will just keep it this way that we just keep our income incognito to the government the time may come that they will question the legality of our income. Specially that we have a law that is called anti laundering law. And as good citizen we should share our in come to the government in the form of taxes for the welfare of the people who needed it.

Any law on money laundering is applicable to Fiat. Bitcoin is not recognized as a government currency and therefore can not be income. If you keep your bitcoins there are no problems with the law you will not. If you cashed them through the exchange for dollars is the income earned outside of your state and also should not be taxed. But best of all if it is possible to spend bitcoins in the online store.

Well technically they are not violating any laws as the gains you will receive from buying and selling of cryptocurrency are not called income but they are called capital gains, the tricky part here is that not all capital gains tax rates are the same your country might have different rates for stocks, real estate, and for sure Bitcoin does not have anything as of yet but they will most likely match it to the tax rates of the stocks.

My country is far behind in matters related to cryptocurrencies. There is no law that regulates the purchase or sale, therefore it is difficult to declare bitcoin incomes here, so I do not think there is a crime to pursue, especially when my income derived from the cryptos are very small.

I think the state will not be able to track our individual interest transactions, we can only track wallet transactions and can not track the owners of the accounts, the state can only get taxes when we exchange bitcoins with fiat money, and the use of bitcoin ATM

Well the government can now track our bitcoin earnings as long as we use the exchange service because our every transaction is now recorded. Here in my country our local exchange will required as an goverment issue ID for our true identifications so that every time we convert our bitcoin to fiat there is a record. I think we dont need to declare our bitcoin income unless if the government required as to do so as a policy but if not they are already earning to our every local exchange transactions therefore no need to declare bitcoin income because we are already paying bitcoin tax thru exchanger service.

You should declared and pay the bitcoin income tax if you are required to do so because if the bitcoin is legal in your country you need to abide the law and your government policy to avoid facing the consequences. But if your government is not strict of your personal bitcoin income maybe i think you are already paying the tax thru your bitcoin exchange services fees in which the part of the amount of the fees is your tax to the government therefore no need to declare an bitcoin income because they will just depend to your bitcoin amount to be change to fiat.

In my country, you can't even find a place where "Bitcoin" is written on something, so i don't think if the government would need to be concerned with anything related to bitcoin right now. Maybe if in future bitcoin overtakes the country and is found everywhere then maybe the government will start tracking the incomes of people coming out of it, but that doesn't seem to be happening very soon. So i don't really declare my bitcoin income and i don't even need to do that.

yeah thats the reason you have to be careful with your taxes anway, especially concerning cryptocurrencies

But my question is: HOW are they going to monitor blockchain if they plan to??
Seems like an impossible task, plus they would need a lot of talent.

Each state will establish its own rules for the circulation of the crypto currency and its tax rates and its object. It is up to each individual to decide whether to pay such taxes or not, since it is really difficult to track them. Apparently, the taxable income will differentiate depending on the size of the profit and some minimal amount of operations with the crypto currency will not be taxed.

There are several blockchain analysis companies, e.g. Chainalysis and Elliptic. This sector is growing quite quickly, and it sounds like they are getting pretty sophisticated. Blockchain and taint analysis seems arduous to us, but Bitcoin is not particularly private, and with the right tools it should not be nearly as difficult as some people think.

These companies are already working closely with law enforcement in the area of tracking darknet market activity. In the future, I think it's possible that they could coordinate with tax authorities too. In the short term, though, governments already have their hands full trying to get a handle on exchanges. It will be a while before we get to that point.

I can't understand what's the problem? If you buy goods over the Internet then I doubt very much that the government will be able to trace you. You are beyond his reach. But this possibility is now very limited. Most users change their bitcoins for Fiat. For the government there is nothing difficult to obtain information about your income to the Bank account. This amount will be subject to taxation.

The thing is that governments are not monitoring bitcoin transactions so they can not state that you made this much in the given tax year to claim on your FIAT tax form.

If they wanted to then they would be hiring crypto officers to follow these which I do not think they would be able to track each and every transaction anyways.

You think that each government will create own crypto department to audit all these transactions on the blockchain?

An impossible feat I would attest too.

Since my government is not mentioned that bitcoin is illegal, we still can use bitcoin with own risk. And as I heard about recent update about government policy against bitcoin, they will not legalized bitcoin so there is no point for us to declare my bitcoin income.
In other side, I'm feel happy because I can use bitcoin without paying any tax

If the transaction happens between an online wallet and a real bank.
I think the government can track all transactions that occur through An interbank network, and the government knows where money comes from. Because, every system of the bank has been installed code a kind <hastag/tag>.
With a <hastag/tag> code the bank transactions engine can make a recording and automating the reports to the sekurity or related officers.

The quotation, “Every system is perfectly designed to get the results it gets."

Yea, in the us you just cash out and they tax you on that. However, what your government is doing is very interesting. Would that mean higher transaction rates for you?

In my country there are no problems with using bitcoins. The government banned them and did not recognize. This allows me to freely use bitcoin but I remain cautious. I will not exchange the bitcoin to Fiat in large amounts. It allows me to stay in the shadows and not paying taxes. Large purchases I make only for cash.

I think there is a problem with this.

Some governments have no laws that corresponds to Bitcoins. -- Thus, people do not know how to treat Bitcoins in terms of taxing regulation since in the first place, Bitcoin is not even accepted in their country. Question now is, how can you tax an income you do not even accept or honor? In this case, these governments will be put in a contradicting position. That is, when they tax incomes derived from Bitcoins, it is indirectly saying it accepts/honors Bitcoins. Thus, they will be put in estoppel in the long run.

You're going to far with it. It's all much simpler. How would you even attempt to tax BTC as a cryptocurrency. I'm not talking about fiat or goods bought with cryptocurrency but your coins that went from $60 to $6000 in 5 years. IMO it's still impossible and will remain so. You can trace transactions and you can target exchanges, but people who mined their coins or bought them with cash via a face to face exchange or an ATM are untraceable.

Governments don't think about it. They are not interested in what to take taxes from bitcoins is illegal. Their interests are only material. If you bought bitcoins and then sold them from the point of view of the government Fiat which you make on the account will be considered your income. It turns out that 2 times they take taxes from your income.

The legality of Bitcoin is not important in order to be deemed taxable. Heck even income earned from marijuana and cocaine is taxable even though they are illegal. Remember that we have tax in order to avoid people who are becoming unjustly enrich and even if you are only earning purely on Bitcoin currency it does not make you exempted on paying your income tax or if you earned it through trading you will have a capital gains tax.

What is going on here :

You can always go the localbitcoin route and trade it for FIAT in person without a bank.

bitcoin not fully anonymous and every address can be trackable moreover the address which come from the official exchange because in my county there are some term to get verified account to optimize the features from the particular exchange and provide personal ID is necessary so if the government asking the data members from that exchange then every person will be identified and directly government will know our earnings from bitcoin

You are wrong.
In case of an undisclosed income investigation it's not the government that is required to prove the sources of your income but you! They will ask you to disclose the origin of the money. Normally you'd say that you earned it from an employer or got it as a gift, but in such case you're still required to pay income tax. How will you explain large money coming from a bank account of an exchange? That these are your money that you sent there for trading? They will ask you to prove it and if you fail to produce evidence they'll assume it wasn't taxed and do it for you at a higher rate ;)

But the record will exist in Localbitcoins, right? And nowadays, LBC is asking for tier 2 verification, which includes ID documents and other details. I would advice anyone who doesn't want to pay taxes on Bitcoin profits to travel to a country like Thailand or Indonesia, and then sell their coins for fiat cash.

Well you must live there then, because you'll get local currency. Also, travelling with a suitcase full of cash is usually illegal (and risky).

My plan is to create a small company doing some legitimate crypto business, maybe a variation of LBC trading, and simply fudge the numbers a bit to convert some of my stash into declared, taxed income. The state is getting its taxes so it should be happy.

please see here:
https://www.congress.gov/bill/115th-congress/senate-bill/1241/text#toc-idea0e9489fc8f46379f95bb56c8bbbda5

to sum that up in real people words,

 

so if you convert that bitcoin to any other asset class that has real world value, you will be subject to taxation. and failure to observe that tax will make you criminally liable. and with the ability to lose more than the contested funds, you are actually running a fair risk of fucking clean up.

just pay the bastards the money if it is over the reporting threshold. make your life easier.

Yes. Most will not declare it as it is also not being traced by the government. For now, since the government has not yet imposed specific tax on Bitcoins, the tax is paid through personal income tax. Which is filed and declared in an honest basis. Bitcoin earning is not only the one being evaded, but mostly all the business owners. There are a lot of ways to evade tax. That is why the government in the future might regulate or impose a specific tax for Bitcoins especially now that it is getting stronger in value.

You can always sell the bitcoins to cash and then it would be impossible to track you up.

Also remember that as long as you don't sell back your bitcoins into fiat, you won't need to pay any tax fees or to declare anything.

In my country, it is impossible to declare about profits from bitcoin because the country simply doesn't recognize the currency, so no one actually pays any taxes.

At most of the countries, bitcoin is count as an asset and you will need to pay taxes as you were trading a house or something like that.

And to whom would you be selling it to then? In a lot of cases you will have to provide some sort of identification in order to go through with a transaction. Not the mention the fact that at some pont in time your government might be able to backtrack all your previous transactions and charge you for money laundering.

The most important point here is how you transfer your bitcoins in cash, or in some product.
Tere are so many ways to sell bitcoins without leaving a physical trail... You just have to remember that if you want to hide your bitcoins - never buy thomething that will have your name on the check

I will surely not declare all my earning here because this is how supposed to be, bitcoin is decentralized and Government will surely not know how much your profit is. Well i can easily convert my btc into fiat.

New technologies will always hard on regulation, this happened to Uber in several countries, in Brazil, they even prohibited for hours a couple of time the app Whatsapp when they implanted cryptography in the conversations. The blockchain is public all right, but new developments are making more and more difficult this traceability, for example, new apps wallets are creating a different address automatically for every new deposit and implementing Lightning Network, obscuration and other technologies that will make transaction completely anonymous. So, probably they will keep track on the very end when it comes to the fiat side or similar.

While bitcoin is not completely anonymous,  it's still less trackable than bank transactions.  If you choose not to pay taxes,  good luck op.

The government can track the gain you get from Bitcoin . When you convert Bitcoin to the currency in a local stock exchange,  when you transfer money to your bank account, it is clear that your bank account has earned the money from digital money. If you did not file a tax declaration for this money, you may have to pay taxes retroactively if this is later detected by the finance.

It is not possible without paying taxes, the government will scan everyone banks for transacting the bulk amounts. So it is always good to pay taxes on Bitcoin transaction so that government will understand to legalize the Bitcoin.

No one can say now much did you spend on coffee or donuts last week, if you pay cash for it, right?)
The same way no one can calculate how much did you spend during your trip around the world, where you can always sell bitcoins for some local currency, so if I would like to buy something that has my name on a check for bitcoins - I will probably have one more account for this, were will be only named transactions

Well it may be hard for a government to track your bitcoin earning but it is also hard to explain to them once your lifestyle changed and your asset increased in an instant.

Not declaring bitcoin income
It is a virtual currency created by a person and put on the floor
It helps us earn money but does not mean to be declared :-\ :-\ :-\

Once your revenue department found out that you are not declaring your income from your bitcoin then they might go after you for that. It should be included on your tax return.

Unless you convert your Bitcoin into fiat and transfer it to your bank. Government isn't involved at all. You are taxed on the gain you made that are calculated through fiat amount. Nobody is interested in your Bitcoin movement over the internet.

Possibly. Because you can't hide much if your government is already concerned about it and has given you permission to use it without any regulations, and if they find out you are earning it but not paying any tax or something for it, they will surely come for you and you might have to pay a penalty for doing that. In my country, the government has not yet known about bitcoin and that is why there is no tension like that for us right now. We may face this situation in future when the government will start noticing the spread of bitcoin in the country.

Exchange are taking fee from bitcoin

Bitcoin can be your source of income in your daily life. Bitcoin has a big value that sustain your everyday needs. Bitcoin can really help us in our financial needs. Here in my country you should pay a fee of getting the money at the store, but there is no paying of tax here because Bitcoin is not known here.

There is no certain way to track the bitcoins you own unless you register in the country's specific bitcoin based wallet and give them your bank details for
transferring the bitcoins into country's money and saving it in the bank account.

Here in my country we have a wallet that have permit in the government but i think we dont have tax if the topic or related in bitcoin transaction because i dont pay tax,i think they authorizing bitcoin here as a business so the owner of the wallet have tax but the user of the wallet dont have tax

Legally speaking you absolutely have to declare Bitcoin income. Income is income, and most countries technically would require you to declare drug dealing income as well.

IMO investing bitcoin just same as investing on gold so,
Have you declare gold income ?

I don't think so !

Since bitcoin have another advantage that can be work like fiat doesn't mean it can be act like fiat's rule / policy

Bitcoin is new, it will take time for all the countries to make some strict rules for all countries especially for any third-word country.

As long as they are not going to sue me if I did not do that then I won't. There are still only a few people knows about crypto and bitcoin and I'm also not worried because my government take many years before they make an action.

I have already heard some rumors that my country would have the plan on regulating bitcoin and this would really be a bad thing for me since I'm a tax evader and I don't like to pay up taxes related on my bitcoin earnings knowing that government do impose 12% tax and that's too much. Imagine you do have 1 btc and they will get 0.12 on that one which is too much.

There is no law on BTC taxation here and I am not aware of the plans that the government has on this. It just depends on an individual. If you want to declare your source of wealth and pay taxes for your income, then you can. What will people in regions where Bitcoin has been banned do? Will they pay tax for income gotten from trading BTC? No they will not.

How did they imposed taxed in not physical money what is their basis?
How they do tracked the transactions of every bitcoin earners?
They consider how many people are using bitcoin? What blockchain they used to collect taxed from all bitcoin earners?
I do not think government can make a law in digital currency no one can regulates bitcoin, government only support bitcoin and they cant earn money for the people who earn bitcoin even it is fully adopted by their government.

We cannot deny that governments has also knowledge and idea about bitcoin. There some agencies under the government who is responsible for tracing any illegal transactions online such as FBI.
However, they could not impose tax or declare bitcoin income unless they will have control and manage on bitcoin.

12% tax is extremely low, a country can't work well with so low taxation. In my country it would be taxed as income, so if I were to sell let's say 10 BTC, I would get taxed at 40 or 45%.

As far as I know, my fellow citizens here in my country are free to earn, buy and sell bitcoin and not declaring our  income will not charge us any case by our government.

It is not true that bitcoin will not declare or consider as alternative source of income. To be honest bitcoin provide options on how to earn income in most convenient and easiet way. 
They make the life of everyone more easier than before so you must consider to invest with it.  Bitcoin will make your life more suceesful in future.

That's right bitcoin makes it easy for us to work and have income so the best option is beinvestment in bitcoin.

Bitcoin has made it easier for people to earn money in other countries and bring it to their own country. is not that a good thing as a cooperation between countries.

Even if they would fully adopt bitcoin they cant still impose taxes directly or to itself maybe on exchanges or on other regulated services which have being used by bitcoiners but on other hidden transactions then its not possible this is somehow the reason why government wont really consider bitcoin to be adopted because of this taxation matter besides if people would able to earn some decent amount on bitcoin form they wontt really tend to disclose or declare because of tax deduction.

I think from every transaction we've been taxed, especially when the transaction of bitcoin withdrawal into currency, so we want to declare or not about bitcoin income, it is not so influentia

You are not paying any tax when you convert your coins to fiat cash. The exchange may be paying a part of the fees as tax, but you are not paying tax at that point of time. The tax needs to be paid later, after finding out whether the profits from such a trade is classified as ordinary income or as capital gains. If it is possible to classify the income as long-term capital gains, then you will be able to escape with a lower tax rate.

Income tax has been an issue recently since the price hike, nowadays government havent create any regulations about bitcoin taxes yet. So basically when we mining and gain bitcoin, thats not an issue because they dont have any regulations nor any capability to track every single transactions of the users. However when we converting the bitcoin into our own currency, some government will apply income tax based of how much money you gain from a single transaction, in my country as example i also struggling with bitcoin converting in every single transaction we made, it will be going through bank and government before going into our wallet. But there will always be a legal way to help us getting our own money, i suggest asking for tax accountant rather than asking in forum, because every country has their own tax regulations and there will always be ways to make money from that  ;D

Nope, my government here is really against bitcoin and bitcoin transaction. Fyi bitcoin is not very popular here, it's like only 0.5% of the total population in my country here know about bitcoin. 2 weeks ago the head of Stellar XLM come to indonesia and talk with our government though, it's a good news for bitcoin user here.

Lol no, that is not tax.

What does "3rd world countries" exactly mean? I have no idea at all

I belong to the 3rd world country. Governments are corrupt they scam peoples money by paying big taxes. That's why people are wise now they use bitcoin as commodity and a store of value. the problem here is we need to address our concern that we should show them our minimum income, we need a decentralization not centralize. i hate governments that are scamming people to pay them 20-30% tax income.

If your country accepts bitcoin coins they will levy bitcoin. Many countries have banned the bitcoin trade in 2018, if they detect that your bitcoin deal will be fined :(

Well maybe if the government is really want to track me if i will not declare my assets in bitcoin, then they can.

No its not true, all earnings came from bitcoin is income. Bitcoin provides the easiest way on how to earn income without doing any effort to have it; which helps alot in the entire humanity.

Government can really track those bitcoin transactions using your service provider or wallet because it has your history. In here, we have this monopoly of the e-wallet which is i think the only wallet we can have. If they want to dig in on its customers, they can do it. I think we are both on the same country were government doesnt focused on the income tax on bitcoin for now. Im sure they will definitely do it if bitcoin continue to mainstream and get their attention.

Its hard for the government to put tax on a very volatile commodity it needs deeper studies. Cryptocurrency is very young to be taxed at this stage, it just caught governments attention when its prices spiked hard and small investments made millions.

Well, with the current development at Brisbane, one would expect that  people would soon be paying taxes like regular income.

another thing that would also propel this is the use of KYC by ICOs. this new trend is pitiably not cool.

they can never track you bitcoin transaction unless you gave it.
here in my country, Central bank requires a list of transaction where you earn your bitcoin before you can open a bank account. maybe that the way of goverment to track your income.

Going back in the past on where banks here on my place doesn't really care about those transactions but the time comes that people involve on crypto did able to cash out millions of local fiat currency which really alarms them and now they are imposing strict compliance and regulations about on those accounts specially on banks. If they do find out you are engaging on crypto you would really be questioned about it.

While your money is in BTCs or any other AltCoin there isn't problem, the government will do nothing about it, but once you start converting large amounts to fiat their alarm will sound. I think it's very unfair to pay expensive taxes, especially if the services in our countries are poor and the corruption levels are high. So what you can do is to withdraw your profit in small amounts, to stay below the government's radar.

It's not illegal, and you are protecting your patrimony. The negative point is that you won't cashout large sums of money fast.

I'm actually hosting a Ask Me Anything right now and would love to get more questions.  A lot of the same questions that were asked are covered here as well.

https://cryptoama.amafeed.com/i-provide-strategic-tax-and-accounting-solutions-for-cryptocurrency-traders-and-479288

I think the government should immediately issue tax regulations in order to synergize between banks or financial institutions with bitcoin trading. Implementation rules ensure the security and convenience of the wider user community or bitcoin traders. Regulators may monitor or place bitcoin controls so that bitcoin usage will be taxed every conversion to the country's official currency. Thanks

We don't need to discuss our income daily monthly or anytime because bitcoin income is very critical. We just need to avoid scam together with hacking if account. Because if we discuss it into other maybe they trigger the other people to hacked our accounts.

it should be better not to declare bitcoin income, besides banks also will never know about bitcoin transactions that we do and how much balance bicoin we have.

Seems like this is really the problem if the government is implementing a tax over cryptocurrency as there is no way to track every participant in crypto world. Aside from this one every information of a member is confidential, so if there is a way that the government solve this issue I think the best way is to build a contact with cryptocurency exchange as I already gave this se answer in this thread https://bitcointalk.org/index.php?topic=2822957.msg30873247#msg30873247
I don't know if it is an effective way on government side.

No need to declare your bitcoin income as long as your government are open on that kind of system. Personally, I convert lots of my bitcoin into fiat money but I never pay any taxes cause its legal here in my place and we can easily convert it even directly on our bank accounts. Its better not to tell anyone about your income to anyone for your own safety, cause people are now too greed when it comes to money matter.

Going back on earlier times on which the banks here in my country doesnt really care at all on which those funds came from until suddenly it took their attention about cryptos and people are already making millions of transactions have been made because of crypto and now they are starting to become strict when it comes on opening accounts for the sake of crypto earnings. Not declaring will really put you in trouble.

yes they can do it.they can find it in the money coming in and out of their bank account.if you dont this, you can trade transactions face to face..

Its bit hard to be tracked as bitcoin transaction is very less. I need to salute your government that they don't care about individuals as long as they pay tax to the bitcoin exchange provider for the service they rent. Its the freedom given by the government. This is the reason behind your country is upcoming rapidly in economy. An educated and an experience leader knows how should get best without affecting citizens.

In India till now there is no any law for taxability of Bitcoin profit but this traceable. Here exchange is asking full kyc for trading in cryptocurrency and I am sure in future government will ask these database from exchanges operated in India. Thanks.

 I think we live in the same country where in our governments doesn't really paying attention regarding cryptocurrency since they are merely focusing on how to stop Drugs in our country. Its a good thing for cryptos like us then but we can't really predict when its going to last. Maybe when bitcoin become more popular here the government might want to dig too far and want to regulate income tax in bitcoin. I hope it wont be too soon because honestly speaking I don't want to declare my bitcoin income yet.

Washing money is another term. It would be easier to pay tax and spend it freely. We start to see this kind of practice in us and I think in some other countries.

This actually is not happening in my country. I am curious if ever how the government is going to tax bitcoin if one day it will be legalized in my country too. Maybe they cant monitor or track how much bitcoin you have but they can maybe track when you convert it to fiat and transfer it to your bank account. I guess thats the basis for the tax.

I do not know which country do you live in. However, it seems that the third world countries do not care about cryptocurrency or rather bitcoin. Perhaps because there are only few who use bitcoin and they still haven't become threats to them. It is a fact that bitcoin is still not known in third world countries.

If you just stop someone and ask him about bitcoin, he will be like "What is bitcoin?". On the other hand, if they are going to legalized it or ban it, more people will be aware of its existence and will fight for it to get it back.

I don't think that they don't care but they don't just have the full basis of data so they can push though to our government for the legality and due to a lot of serious problems maybe they cannot find the time to focus on it but I am sure that they are all working on it.

I don’t know if we both belong in the same country but i guess it is. Actually though the government doesn’t collect taxes from the bitcoin itself but as soon as we converted it into fiat then there goes the tax. That is the reason why we paid for the transactions that we had, either through money remottance or through the bank accounts.

This is smth new for me. Don't you mean that some governments obligate their citizen to declare Bitcoin income? My country has no official laws towards crypto currencies at all so it's quite attractive for me to hear that someone has to declare Bitcoin.

Yes, it is capable to track this as in any other country all over the globe.

I find it too risky not to declare it. If you spend a lot of money with cryptos and link your name to a bitcoin address, you can also draw conclusions
about your income and then it is not far until the state comes to you. Bitcoin is not anonymous as it is mistakenly assumed.

 bitcoin income is a good 

It's good to know that your country is supporting bitcoin because some countries are restricting bitcoin transactions and cryptocurrency trading. I really think it is great if most or almost every country will incorporate cryprocurrency in their daily transactions and daily life because it is really a good innovation that can give convenience to everyone.

See people are so smart these days...they know a way out for everything. That is why they have been able to manage big scams and defraud officials. But that is not the point. The point here is that we being honest taxpayers, are the responsible citizens of this nation. So paying off taxes on bitcoin if demanded by the government is our responsibility.

More the laws become stricter and their implementation being enforced strictly, more it will become difficult for the defrauders to escape from the tax liability.

P.S. : Let's not evade taxes and support the government regime.

Everyone need to pay taxes even if their country don't have taxes for crypto currencies as long as we are converting it into fiat.Because mostly we need to convert it into fiat using bank accounts so our earnings will be recorded so it is necessary to pay taxes as income tax.But the limit for earning will change according to each countries so if the earnings exceeds that limit we need to pay. :)

Whatever you gain from Bitcoin is not stored in any of the government books or records so if you are not declaring that into your income you should not have any problems. If you gain money by making trades or gaining profit on your coin, no one can know unless you tell them. But if you want to convert the money into your account you will be highlighted in the eyes of government and at that time you should pay taxes, otherwise you can face problems at you door.

I'm waiting for that time.

For sure when that happens then the government will also declare regulation of taxes so that no one will end up avoiding paying tax, but for me it is better than totally eliminating bitcoin in our country, which for me is a great help not only in people here in our country but all over the world.

Well here in my country Bitcoin and crypto currency are not accepted as a means payment for goods and services and that has made government not to tax even the local exchanger let alone individuals that are involved in the crypto currency business activities which is one of the benefits we stand to enjoy at the moment pending when the government will realise that they are making a big mistake.

If you trade on centralized exchanges, all your actions are logged and stored on the exchange's servers basically for ever. It doesn't matter if you don't send any fiat to your bank account. At that point you should consider all your trades and profits to be known (compromised) by the government, and therefore you should be paying tax over your gains and whatnot to avoid potential problems. If not, it's basically waiting for problems to come your way, because it's just a matter of time before exchanges are obliged to transfer details of account holders to their local tax department. Governments aren't stupid. They see that the far majority of the people don't pay their due taxes, and the easiest way to deal with this, is to force through restrictions the exchanges have to abide by. No way to avoid it with centralized exchanges....

There's a lot of way for the government to track your profit if they want to do so it's just that there are too many individual and businesses that illegally avoiding taxes compared to profits coming from cryptocurrency but i believe there will be a time that government will chase us for those profit we earn from bitcoin especially there's a lot of news going around that many individuals made fortune themselves through holding bitcoin for such a long time.

In my opinion, they won't be able to track your income unless declared. Cause if Bitcoin is a system that can be tracked by centralized authorities like banks and government, where's the sense of it being decentralized.

About tracking, in the country where I live.. it's still not seen that the government really intend to track the profit from the income/transaction of bitcoin, this is still as in ignorant or not followed up, the state only states.. just said be careful with the risks, if it's got a risk, the country/government will not participate/helping in it.

as long as the bitcoin you get from other wallets didn't melt into the Fiat, of course the government will not know how much your income and how much total assets you have. That is, the assets you own remain anonymous. Another case, if all the bitcoins you have sent to the exchange to sell or cash out, of course the government already had a huge data treasure that you have since your bitcoin in store by the exchange wallet. However, the government cannot suspect the assets you have is illegal, as long as you can prove it where they come from.

In some countries there are local Bitcoin exchanges, which have stock exchanges, identity information of customers and bank accounts. Accounts with high Bitcoin entries can be controlled by the government.

not only are not interested, even some countries strongly disagree with bitcoin that will damage their own currency

Bitcoin here in our country is still not considered as a form of currency. Exchanges are allowed, however the bank always warn the public to be careful on using or investing crypto due to financial risk and security issues. There are also people who were already become victims of crypto scams, and the bank wanted to minimize or eradicate this type of problems. When it comes on taxing income from bitcoin, our country do not have any rules yet. Tracking crypto holders can be possible by getting information of those people who used to cash out money through their bitcon wallet and used to take it from money exchange shop. So its good to have a good record of our bitcoin transactions. But i think in the near future, they will impose tax on those investors or traders who earn a lot from it. Maybe they will set certain amount of bitcoin that can be taxable.

Well, almost all the people, banks and countries have same perception when it comes to investing in bitcoin and that is why if you take the risk here the higher income you will have, bitcoin has already been part of our society so just invest on it as this has been very useful to us.

The government cant track your bitcoin ofcourse because you can change your bitcoin or eth address whenever you want, and that is one big advantage of bitcoin, if your from the country where you need to declare you assets , Im preety sure you know that it is impossible that government officials and workers are using bitcoin as there hiding banks for their future. Not just Government officials but every people can use bitcoin to store and secure there futures

Hi! in my country, we are free also to participate in Bitcoin buying and selling without consent to government. It seems that the government unable to track the Bitcoins income of an individual and give tax in it. Taxes may come after an individual exchange/claim/check out Bitcoin and converted to Local currency, then go to a shopping, pay bills, buy food and etc. In this way the government can collect tax to an individual. Like what you said if not declaring Bitcoin income the government hardly track it or not even traceable.

They may or may not be able to track your incoming funds if they are in the form of Bitcoin. But the moment you convert your coins to fiat, they will be able to track you (unless you are selling your BTC for physical cash without any ID verification). So be careful about it.

I do not know. Because what I understand the Government only prohibits Bitcoin if used as a tool of transactions but still allowed as an investment asset. But the status of Bitcoin in my country is still not legalized and do not know will be legalized or not.

You don't need to pay tax if you are dealing with small amounts. If you cash out and spend it on your daily cost or buying clothes, phones, TV's etc. you are fine. But if you buy something more valuable like cars, houses and such your government will ask you where did you get it. In that case, paying taxes would be advisable. There are some tools that US government or others can use to track crypto transactions and connect them to you exchange profiles, which are verified with documents that you provided them when you registered.

https://www.chainalysis.com/

That is right, the government also allows you to have a small income, they will understand you especially if it is not a fixed income, but it depends on the country since there are really country who were so strict in tax evasion, they want you to declare all your income.

Yes the laws are not that strictly implemented right now. In fact in many countries, the laws are being made but their implementation is not upto the mark!!

But yes when the implementation is made strong, maybe the systems are made and being executed, the government will be able to track the never declared gains because the proper records will be made!

Whatever you gain from Bitcoin is not stored in any of the government records so if you are not declaring that into your income you should not have any problems.

They can track using the bank details, because banks may be asked to provide details if account is being open for btc transactions or any suspicious transactions happening regularly than those details will be forwarded to them and then you will be under scanner.

Every country has its own law about declared assets and as far as I know in my country there is no crypto in that list.
Crypto is anonymous until you decide to change it on fiat money and to output on your credit card, or when you go through verification in exchange market or somewhere (than you also identify yourself).

There is no tax until we keep using bitcoin as bitcoin but still it is not possible yet so we need to convert our bitcoin into fiat so bank is essential so our earning will be recorded so we must need to pay taxes according to our income.

Government can track your transaction because we know that it is traceable on blockchain, if you owns that wallet and that wallet has your own name attached to it. but their are wallets that you can withraw and atm's to change bitcoin to fiat money. Governments in your country are sure using bitcoin to earn a lot for themselves, it has a high chance before you joined bitcoin, they know bitcoin already and they use it for a long time, Governments will sure not slip every opportunity to make income not for their country but for their own profit.

There's no need for the bank to get involved with our bitcoin income. Paying tax is essential whether bitcoin isn't recognized then the only thing that we must do for declaring our tax is to volunteer ourselves going to the tax bureau and declare your bitcoin income.
They can and they can't. If you use an exchange that is sending payment through banks then for sure you are obliged to pay the tax because it is recorded to the bank's system and audit.

Luckily, any government is not capable of having a full control when it goes about BTC.

Just like here our place luckily my government is quite enough on bitcoin now they did not implement any laws regarding bitcoin and all cryptocurrencies here. Besides they are recognized bitcoin as a kind of currency here and that case they are warned us that to be careful and avoid of being Ponzi scheme with this currency because they have nothing to do on this.

What would you expect on the things that government do?They wont really make any chances for someone to skip to their obligations or which they do saw that they can able to make money too. We can say blockchain is on public and can be traced up but this would still be a hard thing and this is why most governments doesn't really like bitcoin after all.They do know that tracing such thing would be difficult.

Yes that is right, so it is better to follow the rules rather than making a legal action with us for not paying the right tax especially when we are earning here, glad that here in Philippines we are not obliged yet to do so, if not then we also need to comply.

That is right, if your money was already in a bank then we don't  have a choice but the bank will automatically deduct tax on it, so for me just think twice what you will gonna do with your income.

It purely depends upon your government and bank. If you convert the bitcoin to local fiat and that amount would be transfer to your bank, if the amount is less there is no issues, at the same time the amount is high you have to answer. The bank should watch all of your transactions if it exceeds beyond the limit.

Yes I am not declaring it, what for it is not required  in our country, but if my country will push me to declare all the bitcoin income I am earning then I will follow them with all my heart, I will not disobey the rules, but since not that we are not yet required then we are still enjoying what we have right now.

Yes, surely. They could track your transactions relatively easily, but nobody cares about this now too much.

If you are using an offshore bank account, then the chances are quite low (unless the amount is very big). There are protocols in place to get information from foreign banks and it is quite complicated. The authorities are not going to use this route, unless the amount is quite large.

Now every bank is tracing the bitcoin transactions because many people are exchanging their bitcoins in a local exchange into their fiat currency. It is very easy for banks to easily identify those transactions.

After upcoming worldwide regulations people will HAVE to declare it. Sad but true

I will not declare my income from BITCOIN in my ITR (Income Tax Return) voluntarily  because here in my country government is not yet requiring it.  They have not yet find a way to taxed cryptocurrency and I hope that they will not for a very long time.  I want to enjoy the fruit of my labor from BITCOIN. 

How come the governement of my country in asia where I lived will scrutinize that part, since there were many type of money trasfers now offered in different countries right now. Definitely the private sectors whom doing the business of money transfers were really required to pay their taxes, but in our side as a trader of the local exchange site we already paid charges while doing the transactions with them. My advice for this matter, please avoid sending huge amounts to bank directly, just do the transactions separately or the other types of money transfers can do.

In my country bitcoin is not recognized at the state level, so I do not see the point of showing the income from this activity.
If we consider the situation with the legalization bitcoin, then I still do not see the point of showing income, what for ?
The more he has such volatility, at which today's profit, tomorrow will become emptiness.

Why would anyone be forced to disclose their assets and if so why would they reveal everything and if not how on earth are they going to know about it.

You need to pay your tax when ever you convert to fiat currency, there is no provision to pay your taxes while you are holding the coins and you really do not need to disclose your amount too.

If you have made money with bitcoin and you have converted it to fiat currency you have to pay your taxes for the income you have made.

I am sure in my country the Government cannot trace the people who benefit from the Bitcoin transactions. Bitcoin is highly transparent and very difficult to trace when we have made transactions with Bitcoin.

Why not? They can detect it if they want to for sure there are always ways, as of the moment since our law is not yet requiring too then I am not also obliged to pay tax with my bitcoin income, but will become open and willing to pay if our law requires for as long as it will be fair and just.

Many persons who will try to avoid declaring bitcoin income as much as they want, they are not afraid of taking risk of their names, especially when they knew that their government is not that too strict when it comes to declaring taxes, well they are lucky if their country is not too strict.

I am not a perfect and law abiding citizen, there is also instances in my life when I will find solution how can I avoid to pay tax too, but in the end my conscience prevails and thinking always about the possibility and outcome of my decision and I don't want to regret in the future.

While governments do not have the ability to monitor transactions with the crypto currency in order to levy a tax on these operations. Governments can control the exchange-traded exchanges and exchangers located on their territory. They can also monitor the services of banks with crypto currency. Therefore, first of all, it is necessary to know whether your government collects information from these financial institutions for the tax authorities. In addition, it is necessary to know the tax legislation of the country of residence in order to use it izyanami. Such flaws and miscalculations will be necessary, since the crypto currency is still a new kind of taxation. It is only on the basis of this information that it is possible to conclude whether it is worth declaring your income in bitcoin.

We know that bitcoin is illegal. We know how important the bitcoin is, and if we legalize bitcoin, there will be a time there is always an involvement between government and bitcoin. Every move, or every transaction involving bitcoin, there is always be a transaction fee. We should not let government get bitcoin, for us we can have that feeling a fee for all of our transactions. Declaring bitcoin income is like declaring your earnings to government, and will put an income tax, where our earning have deductions.

For those countries who banned bitcoin yes it is really illegal and that they don't want bitcoin to enter their community for a reason that their people are not paying the right tax, but in most cases there are companies as well that does not need to pay tax as they are not requiring it, but if required we must follow rules.

It completely depends on the government because whether they are considering Bitcoin income as a tax if government start supporting many people will start paying their taxes for their bank transaction. Bitcoin blockchain is completely decentralized which they can easily trace the transaction by giving the address of the trading to the government.

In the country where I live, it's not at all visible that the government has the intention to track me in terms of income/profits from bitcoin and etc in it which associated with it. Well maybe because the country hasn't really known about crypto or examine more deeply until interested in regulating it, to controlling it and protect it.
For me personally, yeah this is an opportunity to earn another income side because selling bitcoin to local currency is not prohibited. Still, in my mind.. there will be a time the country will really understand the crypto and support the existence of crypto.

Since only a few merchants are accepting bitcoin here in our country,the government are not tracking the profits we earn from bitcoin. As long as it is not regulated, we can't declare to them the income we got from our online jobs.

This is the main why government don't have major control over the bitcoin, technology is also convincing the government because it is the most secure code where we safely use them without any hacking problem.

Every government can trace Bitcoin transaction if they will regulate it by controlling the local exchanges in which we convert our Bitcoin to fiat. Our local exchanges is KYC compliant in which they are required by the government to screen out their clients by requiring them to submit government issue ID and legal documents in which if they will not follow then of course the local exchange cannot allow to operate. Therefore everytime we will convert Bitcoin to fiat it will be monitor by the government specially if Bitcoin is legal in the country.

At present we cannot expect to harshly intervene the government about bitcoin taxation because we need law that would govern crypto currency taxation, they need to provide and create a law so that they  have guide lines in collecting taxes.

That is why Government wants to regulate cryptocurrency, they say they want everyone who trades in a specific country to be safe from money laundering and other criminal activities that has a high possibility in the future. But behind the major purpose is the Government will take part of controlling cryptocurrency trading and through regulation they could implement a tax.

I think in my country the Government cannot trace anything about Bitcoin I have and about the benefits gained from Bitcoin transactions. As long as we are careful and keep it very securely, I think no one will know about it including the Government. Until now I am still safe to use Bitcoin in my country.

Nope, you are wrong mate, every transaction on bitcoin was traceable. It can trace on transaction history, but tracing your identity was probably will not happen to bitcoin users that still hide their identity on bitcoin. We have a right for not declaring our income since our government did not make any law regarding bitcoin. So, same here mate we much enjoy using bitcoin while it is not manipulated by my government.

Then the second question if it is true our transaction is seen by the government, what will the government do next? collect our previous income? that's funny.

The government can detect all our transactions. In my country local exchange must have a government permit. So if there is a local exchange that does not have a license they will make news that the local exchange is a scam. In such a way the government would be easy to see all our transactions. Remembering, the requirement of creating on a local exchange must include an identity card for account verification.

I guess the state will not be able to track our individual interest transactions, we can only track wallet transactions and can not track the owners of the accounts, the state can only get taxes when we exchange bitcoins with fiat money, and the use of bitcoin ATM

I think bitcoin is new, it will take time for all the countries to make some strict rules for all countries especially for any third-word country.

My country is far behind in matters related to cryptocurrencies. There is no law that regulates the purchase or sale, therefore it is difficult to declare bitcoin incomes here, so I do not think there is a crime to pursue, especially when my income derived from the cryptos are very small.

Here in our place government does not care about the profit of anyone from btc, bitcoin is not legal but also not illegal so asking tax from bitcoin's community here is not existing. But if the government will do that someday and want to monitor the profit of someone I think the best way is to create a centralized exchange and don't let decentralised exchange control the area. This is the only way because government has no power to all decentralised system.

Agree on what you had said which i do see the same point on why government do really adopt or regulate crypto because they do see that they can able to get tax from it but i would rather choose up for them to regulate than to totally ban itself.As long taxes implemented arent too high then this wont really be a big problem. Declaring bitcoin income would either be known or unknown depending on which medium you would transact on.

I think my country doesn't care anyway if any individual here in our country owns many btc. As today, we are free to earn as much as we could without declaring it. I believe that it would 2-3 years before our government will take legal actions because the increase of btc users here is very slow.

government needed tax but its not compulsory to declaring bitcoin income and its not a crime so its not necessary.

all cryptocurrency transactions can be checked by everyone including the government
in a ledger called blockchain, but because the blockchain system hides the sender and seller's personal data
so maybe the Government can only see the amount and time of the transaction only.
It is difficult for the government to find personal data in the blockchain system.

I will surely not declare all my earning here because this is how supposed to be, bitcoin is decentralized and Government will surely not know how much your profit is. Well i can easily convert my btc into fiat.

In my opinion. the government can track all income and transactions of each of its people because their money is stored in the bank allowing the authorities to check all transactions if they want to find out. but to date in my country, nobody has declared their earnings from bitcoin because it's still not legal.

If it really requiring in your respective country then for sure they will find a way for those people who are earning thru bitcoin they can actually make list of it just like if getting the data in the exchanges, so it it is better to declare it before it would be too late for us.

In my opinion. the government can track all income and transactions of each of its people because their money is stored in the bank allowing the authorities to check all transactions if they want to find out. but to date in my country, nobody has declared their earnings from bitcoin because it's still not legal.

Yes. Most will not declare it as it is also not being traced by the government. For now, since the government has not yet imposed specific tax on Bitcoins, the tax is paid through personal income tax. Which is filed and declared in an honest basis. Bitcoin earning is not only the one being evaded, but mostly all the business owners. There are a lot of ways to evade tax.

It all depends on whether the government controls the cryptoexchange, which is in their jurisdiction.

I personally also never declare my earnings from Bitcoin. I behave like this because I know the government in my country does not like Bitcoin and if I can get revenue from Bitcoin definitely use of Bitcoin will be increasingly prohibited. And of course, I do not want if Bitcoin is getting banned because I am looking for daily income from Bitcoin.

Yeah you're right it's the only way for the government to provide taxes and give control to bitcoin users. make an exchange centralization, where verification of data id and so on will be required and bitcoin users will probably do that because they certainly have to convert to fiat to pay for their needs, but for now it seems the government has not done that yet or have doesnt cared about it yet..

Bitcoin is a virtual currency in the world. In the world, every country will be thinking about bitcoin to make some rules in a country. Apart from this, If you want to convert with fiat, there is need to pay income tax in your country.

I don’t think that bitcoin itself is traceable not unless the government will hire a people that will monitor on the system. But actually for me personally, i don’t think that it is necessary for the government to trace the investors to collect taxes from them. All they need to do is to for the bitcoin to be converted into fiat because most of the bitcoin users do that converting btc to fiat since there are limited establishment still that will accept bitc as payments.

I hope they include deduction of this taxes in exchanges. So it will be easy for us to do taxes. But if that can't be done, I hope they release guidelines.

I think various countries are making law on Bitcoin for acceptance and they are appling tax on Bitcoin income. If we are not declaring Bitcoin income it means we are going against of country law and government can collect tax on our income with penalty.

I think the Government will not be able to track if we do not tell and not talk the income we get from Bitcoin. If I speak openly about Bitcoin's earnings in the country, I'm sure the government will not stay silent and will further prohibit the use of Bitcoin. While a small percentage of the people who are in my country, currently earn income from Bitcoin to meet the needs of his life.

It depends on government law of your country, if you want to pay tax on your income then it would be legal money after deduction of tax.

Yes mate. We have a different country that we live in but the same way on how the taxes can be collected from us. And i guess many countries does the same way as ours. We cannot use bitcoins in a lot of transactions everywhere, so what we need to do is to convert our bitcoins into fiat. In that way, we are all obligated to declare our income from bitcoin to our local currency. Therefore it is not true that bitcoin can destroy a country just because of thaxes issues.

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Not sure which government do not care for income they will receive as a tax form the taxpayers. Govt require money which ever country let it be to run their administration and by not paying taxes you are asking them to prove in the court of law that you are guilty and then you will be penalized for that.

Because in my country Bitcoin has not been legalized. So I never stated earnings from Bitcoin. If I declare the income from Bitcoin would be the complicated business. Bitcoin has not been taxed in my country so I am still very free to use it.

In my own understanding about taxation thru local exchanges in which it will always depend on how much Bitcoin you will going to convert to fiat therefore no need for income declaration because once you convert a certain amount of Bitcoin to fiat then the Bitcoin tax was already included together with the service charge which is the same regulation policy with other countries including ours.

Here in my country they don't about our earnings in bitcoin. So we don't need to declare our earnings in bitcoin. I don't know in other countries  if it the same like ours.

We started seeing this kind of practice in us and I think in some other countries and laundering money is another term. It's easier to pay taxes and spend it freely

If the government has established a tax on income from activities in the crypto currency, it will unambiguously track them. Just now there are still other problems with the crypto currency. In addition, most states have not yet fully studied and have not fully determined the crypto currency, including on the methods of monitoring the collection of taxes from its use. In the future such control will be strengthened and if the government sees that people do not pay taxes, then various prohibitions and restrictions can be introduced, up to the complete prohibition of decentralized crypto currency.

If you translate crypt into phiath, then they will find out and you will have to pay taxes, but if you keep them in the distant future, then how do they know how much you keep at home.

Government have eyes on cryptocurrency user's transaction every time. It is right at the present they don't have overall control about it,when they will in the position to implement taxes on bitcoins you must declare bitcoins income. Why peoples are so worry who use bitcoin.Declare income pay tax go safely.

People should declare bitcoin income because it can be traced when we convert into the currency. When you transfer your income  into bank accounts  income tax officer can make some questions about this income  so it's right to disclose income of bitcoin.

I also did not declare any of my bitcoin income. I will wait first for an official law that states that all of our profits from bitcoin and also in altcoins are subject to tax. But I don't even hear any plans at this moment so I'm free to encash all of it without any deductions.

Does anyone have suggestions on ways to help with a relatively large capital gains tax bill? I sold a fair amount of my holdings back in February and as a result have a decent capital gains tax liability, but obviously would like to avoid this as much as possible.

I came across this blog post the other day at it seemed interesting, anyone know anything about this program? Seems like its a part of the new tax bill but I'm not sure if this is a good option compared to something else that may be out there.

https://fundrise.com/education/blog-posts/tax-incentives-of-investing-in-opportunity-zones

Same situation here in my country as of now we still enjoy using bitcoin and earning bitcoin from working here in the forum and trading.
They did not declare it is illegal but no further announcement that this is legal, the good thing is they are quite enough into these cryptocurrencies earning. But at least we know that we are not making any illegal activities of earning bitcoin and we have evidence to show where our bitcoin comes from not in fraudulent.

The goverment may surely check all your tranfers from and to exchanges but transfers made with crypto is to hard to trace at least for now.

Each country might have or not have that kind of law when it comes to bitcoin taxes but on normal cases we are really obliged to pay up taxes. How you would able to hide the transactions into your bank account when you do make conversions from btc to fiat? For sure you would got questioned specially when you earn big amounts but for smaller or reasonable ones then i dont think it would be a big issue.
For now we should cherish on not paying up taxes because sooner or later they would surely implement it.

I think this is indeed controlled by the government, therefore bitcoin is subject to tax every time we make a transaction, if we are traced we then use bitcoin without us having to pay taxes. but in some countries bitcoin has not been so accepted by the government for various reasons, not as freely as you intended in your country.

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