Paying taxes on Bitcoin income

[slardar]

Do people do this? Is it required? Does this count as "gifts" or "barter" or "income" or expensable/are bitcoin donations converted to fiat amounts tax-deductible if you donate to a bitcoin charity?

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[odolvlobo]

Do people do this? Is it required? Does this count as "gifts" or "barter" or "income" or expensable/are bitcoin donations converted to fiat amounts tax-deductible if you donate to a bitcoin charity?

I am not an accountant,  nor a lawyer. The information I've seen says that it is considered barter income. When you donate something to a charity, you can deduct the amount that they sell it for.

[Foxpup]

IANAL, but in most places (it would be helpful if you were more specific), if you earn bitcoins by mining, or as payment for services, then you have to pay regular income tax on the fiat value of your bitcoins when you received them. If you bought bitcoins at an exchange, there is no income tax, but if you later sell or trade your bitcoins for more than what you paid for them, then you have to pay capital gains tax on the difference (if you sell or trade your bitcoins for less than what you paid for them, that's a capital loss which may (or may not) be tax deductible). Bitcoin donations are probably not tax deductible in most cases.

If you search this forum, you will no doubt come across absurd arguments that bitcoins aren't taxable because they aren't real money, or aren't really property, or some other ridiculous reason. Most governments don't actually care about any of that. It doesn't matter in the slightest whether bitcoins are money, a commodity, virtual property, or something else entirely; as long it has value, and you make an income or profit from that value, then you have to pay tax on that value.

[Stephen Gornick]

Do people do this? Is it required? Does this count as "gifts" or "barter" or "income" or expensable/are bitcoin donations converted to fiat amounts tax-deductible if you donate to a bitcoin charity?

What "Bitcoin income".

From mining?

From selling something where you take bitcoins for payment?

From gains realized from speculation?   Is this long term gains (one year or more) or short term (less than a yaer)?

All have different treatment.

 - http://en.bitcoin.it/wiki/Tax_compliance

[btctalk]

If you change them to USD or spend USD to get BTC then you can include them in your income/outcome. but if I were you I wouldn't mix the BTC and the USD currencies together for a while;)

[strspeed]

Im sure if you call up an accountant and explain what they are to them they could tell you no problem

[slardar]

Im sure if you call up an accountant and explain what they are to them they could tell you no problem

My accountant has no idea and just told me that it might be "wire fraud"

[Stephen Gornick]

Im sure if you call up an accountant and explain what they are to them they could tell you no problem

My accountant has no idea and just told me that it might be "wire fraud"

You probably should find an accountant who has a clue.

[DannyHamilton]

Im sure if you call up an accountant and explain what they are to them they could tell you no problem

My accountant has no idea and just told me that it might be "wire fraud"

In the United States, wire fraud is any fraudulent scheme to intentionally deprive another of property or honest services via wire communication.

It seems you may have done an extremely poor job of explaining what bitcoin is to your accountant.If you got your profit from running a pyramid, ponzi, other scam, or stealing then your accountant is correct.  If you received them from some legitimate process, then you explained it quite poorly.

[2weiX]

i do have bitcoin income from mining, my store and from trading.
since all my bitcoin deals are against the EURO, it's easy to make a simple P/L calculation and pay capital gains tax (25%) on them.

[slardar]

Im sure if you call up an accountant and explain what they are to them they could tell you no problem

My accountant has no idea and just told me that it might be "wire fraud"

In the United States, wire fraud is any fraudulent scheme to intentionally deprive another of property or honest services via wire communication.

It seems you may have done an extremely poor job of explaining what bitcoin is to your accountant.If you got your profit from running a pyramid, ponzi, other scam, or stealing then your accountant is correct.  If you received them from some legitimate process, then you explained it quite poorly.

I basically gave a link to the wiki page and weusecoins, her response was that "isn't this one big pyramid scheme where the early adopters have significantly more coins and the later ones pick up the scraps"

[destruct]

Question:

Isn't the entire point of Bitcoins to be annoymous and trade it for cash so it's tax free?

You guys seem to be missing the point if you're claiming it on your taxes.. just sayin.

[Drifter]

Question:

Isn't the entire point of Bitcoins to be annoymous and trade it for cash so it's tax free?

You guys seem to be missing the point if you're claiming it on your taxes.. just sayin.

No..that's not the point of bitcoin at all. Only to a few with an extremely limited mindset.

[DannyHamilton]

Im sure if you call up an accountant and explain what they are to them they could tell you no problem

My accountant has no idea and just told me that it might be "wire fraud"

In the United States, wire fraud is any fraudulent scheme to intentionally deprive another of property or honest services via wire communication.

It seems you may have done an extremely poor job of explaining what bitcoin is to your accountant.If you got your profit from running a pyramid, ponzi, other scam, or stealing then your accountant is correct.  If you received them from some legitimate process, then you explained it quite poorly.

I basically gave a link to the wiki page and weusecoins, her response was that "isn't this one big pyramid scheme where the early adopters have significantly more coins and the later ones pick up the scraps"

You may want to look into finding a new accountant.  One who understands that in any form of mining (Coal, Oil, Gold, Platinum, Diamond, etc) the early adopters get access to significantly larger sources, while later ones have to work harder to find what they are looking for and are likely to find less of it.  Does she consider gold to be "one big pyramid scheme"?  Clearly I could have received $1,240 worth of gold in 1974 and today I could sell it for $17,000 while someone who bought $1,240 worth of gold in the past year wouldn't get more than $1,408 for it today.  Doesn't that mean that as an early adopter I'd have significantly more wealth while later ones pick up the scraps?

[Foxpup]

I basically gave a link to the wiki page and weusecoins, her response was that "isn't this one big pyramid scheme where the early adopters have significantly more coins and the later ones pick up the scraps"

You may want to look into finding a new accountant.  One who understands that in any form of mining (Coal, Oil, Gold, Platinum, Diamond, etc) investment the early adopters get access to significantly larger sources

You definitely need to find a new accountant. Preferably one who actually knows the meaning of the word "investment".

[Gotta go fast!]

Question:

Isn't the entire point of Bitcoins to be annoymous and trade it for cash so it's tax free?

You guys seem to be missing the point if you're claiming it on your taxes.. just sayin.

Yes, it is the point of bitcoin to me.

[RhoDelta]

A key aspect of bitcoin is to prevent against any outside interference, and yes that also includes taxation from governments.

With bitcoin you have the freedom to decide for yourself. Report or not, it is up to you.

[LiteBit]

- http://en.bitcoin.it/wiki/Tax_compliance

Thanks for link

[2weiX]

Question:

Isn't the entire point of Bitcoins to be annoymous and trade it for cash so it's tax free?

You guys seem to be missing the point if you're claiming it on your taxes.. just sayin.

Yes, it is the point of bitcoin to me.

as long as part of any business goes through "traditional" banks, that part needs to be declared.