Sales taxes, like all taxes, are paid in USD. If you buy something from me for $10+tax, but pay in Bitcoin and so send me x BTC, I'll have that x BTC converted to $10.86 by the payment processor and put in my bank. I'll then send that $0.86 off to the state at the end of the year. The only effect is x BTC got sold for $10.86. If I instead decide to hold the BTC, I would be sensible to convert at least some to $0.86 to pay my taxes.

If you are talking about capital gains taxes, then it depends on your country and how long you've owned the coins.

UK, for example, gains are taxed as income but not until the first £10,400. So unless you have more than that it gains, you don't have anything to report or pay. Germany taxes short-term gains, but anything over a year is exempt.

For VAT, if you sell something, you don't pay VAT you charge it. VAT is a tax added onto the price a consumer pays when purchasing from a VAT registered business. It is a pass-through tax that eventually goes to the government.

As an individual, you aren't VAT registered, and even if you were by running a business you still don't pay VAT on selling item, your buyers would pay it.

The whole "do Bitcoins sales incur VAT" question is currently being questioned in the EU courts (see http://www.bitcoin.se/2014/12/06/update-on-vat-case-in-eu-court-of-justice/) so we'll have to wait and see.

If they are employees (opposed to contractors), then you are paying them in dollars but just the payment just happens to be in Bitcoins instead of cash, direct-deposit or jelly-beans. This dollar value is taxed and included on their W-2 like any other wage.

From your perspective it should be no different. If you normally pay them a fixed wage, you should use that dollar value and take any withholding. social security and Medicare taxes as normal. If you are paying them in fixed Bitcoins, you would need to calculate that dollar value as if you have paid them in cash, and calculate the appropriate taxes.

See Q11 in http://www.irs.gov/pub/irs-drop/n-14-21.pdf

This is an interesting one, and the current thought is that you will have to claim MtGox coins as a casualty loss for their cost basis.

However, it's likely that you can't even do that this year since the bankruptcy process is ongoing and you might actually be awarded some values for your coins, albeit tiny. If that were the case, you could claim a capital loss. However, once they finalize the bankruptcy and creditors are paid off, (fiat balances may be paid something, I'm guessing coin balances will get nothing) then losses will be taken in that tax year.

They already said it will be at least 2015, so not you file in 2016 before you can add them to your tax forms.

If you do have casualty losses, first, you need to be able to prove the cost basis of those coins. This means you need good records of your past purchases to be able to identify the coins in MtGox that are gone. Remember you can only claim the original basis and not their market value.

Next, you have to reduce casualty losses by $100 and then 10% of your AGI. So if you had 10 coins that you had bought at $800, you aren't going to see anything if your AGI is $80k or less. 10x800 - 100 - (10% * 80,000) = -100. (This is for personal property.)

If you have large losses, speak to a tax attorney.

If you only bought them, you do not need to do anything.

However, if you earned or mined them, they are treated as income at the fair value or their daily price


There are no time limits. You would need to refile past years if you had income to declare.


You would definitely want to declare that, as you have $70,000 capital losses you can offset against other gains and a portion of your income. That's a $27k tax rebate (albeit over many years).


These aren't new laws, they are clarifying existing ones, so they are retrospective.

BitcoinTaxes (formally bitcointaxes.info), the crypto-currency tax calculator has been updated to 2.0 ready for 2015.

https://bitcoin.tax/blog/bitcoin-taxes-v2-released/

• Moved to bitcoin.tax
• Adding income from Coinbase, BitPay, CEX.IO
• Adding income from mining addresses with price lookup
• Adding spending, donations and gift/tips from Coinbase, Core/Qt Wallets, Blockchain.info
• Address and transaction viewer
• Market prices for over 2,000 trading pairs
• Support for Kraken
• Optional like-kind treatment calculation
• Automatic calculation of opening position and cost-basis
• Income report
• Donation/Gifts cost-basis report

You should consider including any coins you spend or sold at a loss during 2014 (in the US) on your taxes so you get a tax deduction. You can offset other gains as well as up to $3,000 each year.

It's in development and will be in https://bitcointaxes.info hopefully by end April, along with a tracking service for purchasing.

I am literally working on it...but can't say it's going to be in before tax day, aiming for end April.

Yes. I don't have much data to check it with. Can you contact me through the Feedback button and the site so I can get some samples files to make sure it's going to work.

It really isn't. You don't own WoW gold (which has no market value) and it is just a parameter of your account, which is wholly owned by Blizzard.

You can use https://bitcointaxes.info to calculate average cost basis for Canada for all our supported exchanges. We don't yet support CaVirtex but if you can get the CSV you can convert it into our general format and import it that way.

Ok, first, it's going to be a loss in 2014 (so for filing in 2015) not 2013. So there's nothing you can do right now anyway. It may even extend beyond that, we don't know.

If and when the bankruptcy is declared and you know what's going to happen, then you can take the loss of your coins. They are effectively sold for zero, unless you are given some compensation for your coins.

If you had downloaded your trading records, then you'll be able to work out the cost basis for those coins and report them as a loss. However, you can only claim the loss on the cost of the coins, not their worth. So if you bought 300 BTC at $10 each in Feb 2013, your loss is only $3k.

File it like any capital loss. You can offset any gains first, and then the remaining against your income up to $3k per year. You have to carry the remaining into the following years, where it can be offset against any amount of gains or income up to $3k.

IRS specifically says wash sales applies to stock and securities. Sure, maybe they should, but they don't.

Wash sales aren't applicable to Bitcoins, only stocks and securities.

The IRS rules are clear. It is your responsibility to keep records. If you don't, fail to report any taxes, and found out during an audit, you could face fraud or negligence charges with civil penalties.

I suggest you file for an extension and hope MtGox gives access in the next 6 months.

Nothing really changed as far as capital gains goes, with the exception of you absolutely do have to record every purchase you make, so you can calculate any potential gains.

Mining was clarified. Till now some people were treating it as manufactured stock, and so only realized income when sold. Not the case now. It's income the day it was mined. And any increase in value thereafter is capital gains.

You're right. It's complicated. Easy enough for trades with bitcointaxes, but purchases need to done too.


Only applies to stock and securities.

Owing gains and 1099 reporting (i.e. the $600) are not related.

http://www.irs.gov/pub/irs-drop/n-14-21.pdf

Main points:

• Bitcoin/crypto-currencies are property, not a currency, and so capital gains applies.
• Spending coins is a tax event and must account for gains
• Being paid in coins for goods/services is income, and treated as USD of the fair market value on the date of receipt.
• Conversion calculations to USD must be reasonable and consistent.
• Mined coins are income on the date of receipt at fair market value (i.e. they are not stock)

This is how https://bitcointaxes.info had been working out capital gains, so if you used it you don't need to change anything. But if you had already filed last year as a currency, you'll need to amend your return.

https://bitcointaxes.info

• imports trade history from MtGox, Coinbase, Bitstamp, BTC-e, Cryptsy, Bitfinex, Bitfloor, CampBX, LocalBitcoins
• manual entry of trades
• import/add cost basis for coins owned in 2012 or earlier
• calculates short / long term capital gains
• uses First-In-First-Out, average costing or "specific identification" (e.g. Last-In-First-Out)
• exports data ready to enter on Schedule D Form 8949
• exports TurboTax and TaxACT import data
• multi-year support for traders before 2013
• multi-currency support for your tax country: USD, GBP, EUR, CAD, AUD
• calculates gains for alt-coin and cross-coin trading
• shows closing positions balances and cost basis for next year
• tax estimate calculations for US tax payers
• free version for unlimited BTC trades and premium for alt-coins/multi-year

Coming soon:

• support for UK, Canada, Australia, Germany tax rules
• current year gain and tax liabilities
• maintain purchase records from coin addresses
• mining income calculators

If you are doing your own taxes, it would make sense to treat bitcoins / alt-coins as capital assets. Although I have read some accountants are filing as a currency but more so they can maximize the amount of taxes paid, to ensure their clients do not underpay. However, if you only have short term gains, you will be paying the maximum anyway.