What Tax Do you pay when exchanging Bitcoin ?

[David19]

Ok so for past year i have exchanged approx $300k worth of Bitcoin which directly went to my bank.

Now obviously i have had few concerns on what kind of tax i'm supposed to pay for it, do i just declare them as regulatory income tax?

Shed some light on this situation.


Thanks in advance.

[Meuh6879]

Gov. take VAT on your object.
Gov. take TAX on your GAS.
Gov. take HEAVY TAX on your car.
Gov. emit bunds for your insurrance ... and you pay not less year after year.
Gov. use DEBT to depreciate your job value even when you don't receive a compensation in an increase of pay.






So ... you want pay tax on Bitcoin ?   you, fool ...

[David19]

Gov. take VAT on your object.
Gov. take TAX on your GAS.
Gov. take HEAVY TAX on your car.
Gov. emit bunds for your insurrance ... and you pay not less year after year.
Gov. use DEBT to depreciate your job value even when you don't receive a compensation in an increase of pay.






So ... you want pay tax on Bitcoin ?   you, fool ...

I don't want to... but its required or i will get charged even more if i dont pay my income tax

[achow101]

Ok so for past year i have exchanged approx $300k worth of Bitcoin which directly went to my bank.

Now obviously i have had few concerns on what kind of tax i'm supposed to pay for it, do i just declare them as regulatory income tax?

Shed some light on this situation.


Thanks in advance.

It depends on the country. In the US, the IRS views Bitcoin as a property so when you buy and sell, you will need to declare the capital gains or something like that. You should check the Legal subforum for more info: https://bitcointalk.org/index.php?board=74.0

[bitllionaire]

In my country bitcoin is free taxes, however, I don't trade or exchange bitcoin so I have not tested myself

[DannyHamilton]

Ok so for past year i have exchanged approx $300k worth of Bitcoin which directly went to my bank.

Now obviously i have had few concerns on what kind of tax i'm supposed to pay for it, do i just declare them as regulatory income tax?

Shed some light on this situation.


Thanks in advance.

It all depends on your local jurisdiction.  What country are you in? What state are you in? What county are you in? What city are you in?

To get reliable and safe advice, you really need to be talking to a local tax adviser that is familiar with the laws in your particular jurisdiction.

In general, in the U.S. regarding federal income taxes, the income would typically be considered capital gains tax.  However, other rules may apply to you depending on how you acquired the bitcoins, and what you did with them.

As examples:

• Wages paid to employees using virtual currency are taxable to the employee, must be reported by an employer on a Form W-2, and are subject to federal income tax withholding and payroll taxes
• Payments using virtual currency made to independent contractors and other service providers are taxable and self-employment tax rules generally apply.  Normally, payers must issue Form 1099
• The character of gain or loss from the sale or exchange of virtual currency depends on whether the virtual currency is a capital asset in the hands of the taxpayer. A taxpayer generally realizes ordinary gain or loss on the sale or exchange of virtual currency that is not a capital asset in the hands of the taxpayer.  Inventory and other property held mainly for sale to customers in a trade or for business are examples of property that is not a capital asset.  See Publication 544 for more information about capital assets and the character of gain or loss
• When a taxpayer successfully “mines” virtual currency, the fair market value of the virtual currency as of the date of receipt is includible in gross income
• If a taxpayer’s “mining” of virtual currency constitutes a trade or business, and the “mining” activity is not undertaken by the taxpayer as an employee, the net earnings from self-employment (generally, gross income derived from carrying on a trade or business less allowable deductions) resulting from those activities constitute self-employment income and are subject to the self-employment tax.

[Studio60]

If you're in the U.S. you should probably read the following link. It's from a tax attorney.

http://www.reddit.com/r/Bitcoin/comments/21g6sx/i_am_a_tax_attorney_here_is_what_the_irs_notice/

[Foxpup]

Generally, profit from trading is capital gains, not regular income. Specifically, the rules regarding capital gains tax vary from country to country, so nobody here can help you without knowing what country you're in, other than to tell you to consult an accountant (which you should really be doing anyway instead of asking for tax advice on this forum).

[melody82]

At least its capita gains which are taxed at a lower rate for many people.  I agree that you should not ask for tax advice.  It get so complicated that you are better off hiring a professional.

[jehst]

At least its capita gains which are taxed at a lower rate for many people.  I agree that you should not ask for tax advice.  It get so complicated that you are better off hiring a professional.

These rules apply even if you are buying ice cream. Make sure you have your tax professional on speed-dial on your phone so he can record every time you spend your bitcoin.

[jeannemadrigal2]

At least its capita gains which are taxed at a lower rate for many people.  I agree that you should not ask for tax advice.  It get so complicated that you are better off hiring a professional.

These rules apply even if you are buying ice cream. Make sure you have your tax professional on speed-dial on your phone so he can record every time you spend your bitcoin.

Is that how they are interpreting it?  So if I buy something with coin its taxed?  How is that capital gains?  I am not being a smartass I just want to understand the tax structure of it.

And thanks for the link Studio, I will have to read through that for sure.  Too bad there isn't a one line summary though.

[BayAreaCoins]

No taxation without representation.

[kolloh]

The tax laws are pretty confusing, but I believe if you purchase something with bitcoin, you are supposed to count the value of the item purchased as if you had sold bitcoin for the worth of said item.

[DataSecurityNode]

Ok so for past year i have exchanged approx $300k worth of Bitcoin which directly went to my bank.

Now obviously i have had few concerns on what kind of tax i'm supposed to pay for it, do i just declare them as regulatory income tax?

Shed some light on this situation.


Thanks in advance.

Unless you like being audited.. I know I didn't.. really get a tax pro to do it for you.

It depends on the laws where you live and how they interpret crypto.

Congrates on the $300k though.

[jeannemadrigal2]

The tax laws are pretty confusing, but I believe if you purchase something with bitcoin, you are supposed to count the value of the item purchased as if you had sold bitcoin for the worth of said item.

Crap, that would be horrible.  And it would be double taxation.  At least for me since I bought my coin with money that I already paid taxes on.  Such a scheme would have a chilling effect on legit coin transactions.  Now that I think about it classifying it as property is a pretty ridiculous thing to do.  It is like being on a barter system.  When is the last time you bought a latte with shares of microsoft or a pair of shoes?  Ridiculous.

[BayAreaCoins]

Also just because you had $300k run through your accounts that doesn't mean that is what you are paying on.

Pay on profits. So if the 300k cost you 275k then you are liable for 15k.

Don't over pay your government please.

[Kprawn]

You will find a lot of threads on TAX & Bitcoin here : https://bitcointalk.org/index.php?board=7.0 {This thread should also be moved there} 

This board is the worst place to get TAX advice, because we have a global membership and your Tax laws are localized.

If you are willing to reveal your location, someone from your country, who dealt with this before, would be in a position to share their experience with you.

My advice : Pay a local Tax advisor, and do it right from the start. {You do not want to find out later, that you owe them money, and you have to pay fines on top of that}

The sooner the better...  Good luck.   

[Daniel91]

Very good question.
In my country I cashed out Bitcoin a few times through Paypal, but small amounts.
I didn't report this transactions to our IRS yet, but someone told me that I should report it as ''second income'' from abroad.
I'm not sure if our IRS can see this transactions or not, but right now I think I will not report anything.
Already Paypal and exchangers took me a lot fees and I'm not inspired to pay more to someone else who probably have no idea about BTC.

[Amph]

in the past there wans't any rule, if you have done this before the IRS(if you live in usa)launched  the general rules about crypto, then i think you should only pay on the capital gain nothing else

i think to be honest should pay nothing, you should view it as a stamp collection

[BIT-Sharon]

the country you buy bitcoin from, the country yo sell bitcoin to. In some country you just pay tax for the ones you purchase, but not for the ones you sell, right?