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Author Topic: Are you going to pay taxes?  (Read 13352 times)
Lynzoi
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June 06, 2011, 11:02:22 PM
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Are you going to pay taxes on your Bitcoin profits?

Suppose you make a million dollars. Suppose you have already made a million dollars. Are you going to hand half of that cash over to the government? Of course, this is assuming you convert your coins into federally recognized cash. If your only intention is to amass a huge supply of Bitcoins, the question does not apply to you.

You're supposed to pay income taxes. It seems rather easy to get away with not doing it, though... at least in this case.

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Bazil
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June 06, 2011, 11:05:34 PM
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Are you going to pay taxes on your Bitcoin profits?

Suppose you make a million dollars. Suppose you have already made a million dollars. Are you going to hand half of that cash over to the government? Of course, this is assuming you convert your coins into federally recognized cash. If your only intention is to amass a huge supply of Bitcoins, the question does not apply to you.

You're supposed to pay income taxes. It seems rather easy to get away with not doing it, though... at least in this case.

If I convert any to dollars sure.  In the US any profit over $200 for the year is federally taxable I believe.  Of course profit is how much you sold the coins for minus the price you bought them for.

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Grant
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June 06, 2011, 11:05:56 PM
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It's standard "Capital Gains Tax" rather than "Income Tax" when you take it out, just like it would if you sold forex/pm or stocks for that matter.

All governments keep an eye on unusual inflows from accounts on that one, no i wouldn't recommend to cheat on that one.

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June 06, 2011, 11:06:38 PM
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No I'm not.

Here in Switzerland there are no taxes on capital gains.   Grin


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June 06, 2011, 11:08:52 PM
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It's standard "Capital Gains Tax" rather than "Income Tax" when you take it out, just like it would if you sold forex/pm or stocks for that matter.

All governments keep an eye on unusual inflows from accounts on that one, no i wouldn't recommend to cheat on that one.
Yeah, I'd watch out.  It doesn't take much to trigger an IRS audit.

I'll be paying taxes on it, anything above and beyond what my expenses are.
yoyoceramic
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June 06, 2011, 11:09:06 PM
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It's standard "Capital Gains Tax" rather than "Income Tax" when you take it out, just like it would if you sold forex/pm or stocks for that matter.

All governments keep an eye on unusual inflows from accounts on that one, no i wouldn't recommend to cheat on that one.

It is important to distinguish between short term and long term capital gains tax.  Both of which are a function of the ordinary income tax bracket you are in:

Lynzoi
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June 06, 2011, 11:12:06 PM
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It's standard "Capital Gains Tax" rather than "Income Tax" when you take it out, just like it would if you sold forex/pm or stocks for that matter.

All governments keep an eye on unusual inflows from accounts on that one, no i wouldn't recommend to cheat on that one.
Well, that sucks. I suppose suddenly acquiring 1,000,000 is a bit suspicious.

Can't this be reported as gambling winnings? Are those taxed?
No I'm not.

Here in Switzerland there are no taxes on capital gains.   Grin


Oh man... now I want to move to Switzerland. They've got good skiing too.

This makes me wonder what the laws are for people with dual citizenship. Do you have to pay taxes to BOTH countries? Probably not, because then the only way to escape US taxes would be to renounce your citizenship. That sounds difficult.

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June 06, 2011, 11:15:32 PM
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It's standard "Capital Gains Tax" rather than "Income Tax" when you take it out, just like it would if you sold forex/pm or stocks for that matter.

All governments keep an eye on unusual inflows from accounts on that one, no i wouldn't recommend to cheat on that one.
Well, that sucks. I suppose suddenly acquiring 1,000,000 is a bit suspicious.

Can't this be reported as gambling winnings? Are those taxed?
No I'm not.

Here in Switzerland there are no taxes on capital gains.   Grin


Oh man... now I want to move to Switzerland. They've got good skiing too.

This makes me wonder what the laws are for people with dual citizenship. Do you have to pay taxes to BOTH countries? Probably not, because then the only way to escape US taxes would be to renounce your citizenship. That sounds difficult.
I doubt you could pass this off as gambling winnings, and those are taxed anyway (I believe as ordinary income, which would make it higher rate than capital gains).

Doesn't Switzerland have one of the highest income tax rates in the world though?  Something like 80%?  Lack of capital gains taxes or not, that sort of tax rate would make me just want to move there with a bunch of cash and retire, not necessarily become a working person in that environment.
Goldenmaw
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June 06, 2011, 11:15:59 PM
 #9

Yes, definitely.  Those in the US who think they can get away with the kind of brazenly unconcealed tax evasion that a direct bitcoin to cash conversion would be, are in for a shock.

Among other things, I believe it is the right thing to do, not only for my country's well being (we need a government - would you believe that?) but for bitcoin's public image.  The common man will think badly of bitcoin if all he gets to associate it with are images of illegal goods and services, plus tax evasion.
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June 06, 2011, 11:17:08 PM
 #10

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Can't this be reported as gambling winnings? Are those taxed?

Yes, quite heftily. 28% and up.
mewantsbitcoins
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June 06, 2011, 11:18:05 PM
 #11

Move to Hong Kong. They have a flat rate of 16%
Gabriel Beal
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June 06, 2011, 11:19:53 PM
 #12

I am going to be paying taxes on what I cash out.  However, I'm attempting to cash as little out as possible.  So far I haven't cashed out any.

carlerha
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June 06, 2011, 11:21:13 PM
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The common man will think badly of bitcoin if all he gets to associate it with are images of illegal goods and services, plus tax evasion.
So instead of reaching out to the common man telling him about the truth; that taxes imply coercive use of force, and that "illegal goods" are not criminal, but criminalized, you will just keep the lie going on and on…

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June 06, 2011, 11:22:14 PM
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(we need a government - would you believe that?)
No.
Grant
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June 06, 2011, 11:23:07 PM
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Can't this be reported as gambling winnings? Are those taxed?


Depends on country, here in norway any winnings/gains above 10k NOK they view as evil capital gains and i have to pay 28% tax on that in order to sponsor my own tyranny imean in order to pay the mafia that runs my country... wait i mean in order to support democracy Wink

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June 06, 2011, 11:23:44 PM
 #16

Do "capital gains" add to your total income for the purpose of determining your tax bracket or are they taxed at the rate of your income-only tax bracket?

mewantsbitcoins
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June 06, 2011, 11:24:04 PM
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Are you from IRS?
enmaku
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June 06, 2011, 11:24:44 PM
 #18

(we need a government - would you believe that?)
No.
If this forum featured a facebook-esque "like" button, I would have just clicked it.

SgtSpike
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June 06, 2011, 11:26:35 PM
 #19

Do "capital gains" add to your total income for the purpose of determining your tax bracket or are they taxed at the rate of your income-only tax bracket?
I do not believe capital gains adds to your total income for determining your tax rate.
yoyoceramic
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June 06, 2011, 11:27:33 PM
 #20

Do "capital gains" add to your total income for the purpose of determining your tax bracket or are they taxed at the rate of your income-only tax bracket?

No, capital gains are not counted towards ordinary income for determining your tax bracket.

Here is wiki:

Quote
Under the United States Internal Revenue Code, the type of income is defined by its character. Ordinary income is usually characterized as income other than capital gain. Ordinary income can consist of income from wages, salaries, tips, commissions, bonuses, and other types of compensation from employment, interest, dividends, or net income from a sole proprietorship, partnership or LLC. Rents and royalties, after certain deductions, depreciation or depletion allowances, and gambling winnings are also treated as ordinary income. A "short term capital gain", or gain on the sale of an asset held for less than one year of the capital gains holding period, is taxed as ordinary income.
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