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Author Topic: Paying TAX  (Read 4930 times)
danielgold20
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April 30, 2017, 05:52:47 PM
 #1

Hey guys Tell me are there people here who declare regarding there mining profit?
I understand that you " need " to pay tax for the profit from mining
can anyone answer or someone who know something regarding this subject?

Thanks
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April 30, 2017, 06:06:58 PM
 #2

Law is not the same in every part of the world. This is a country specific question.
It also depends on the amount of Bitcoins you're mining. If it's a hobby that brings you $100 a month nobody should care.

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April 30, 2017, 06:34:00 PM
 #3

Law is not the same in every part of the world. This is a country specific question.
It also depends on the amount of Bitcoins you're mining. If it's a hobby that brings you $100 a month nobody should care.

You want to tell me that there is country that I will not need to pay tax?
and no I am looking to invest We purchase already 100 Mainer and we are looking the tax subject right now
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April 30, 2017, 08:34:17 PM
 #4

In the US:

Mining income is taxed as ordinary income at the price on the day and at the time you mine the coins.

Profit/Loss while trading is taxed as a capital gain or loss.

I have paid the income tax on all the coins I have mined and the capital gains tax on all of my trading.

Our family was terrorized by Homeland Security.  Read all about it here:  http://www.jmwagner.com/ and http://www.burtw.com/  Any donations to help us recover from the $300,000 in legal fees and forced donations to the Federal Asset Forfeiture slush fund are greatly appreciated!
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May 01, 2017, 01:39:15 AM
 #5

Law is not the same in every part of the world. This is a country specific question.
It also depends on the amount of Bitcoins you're mining. If it's a hobby that brings you $100 a month nobody should care.

You want to tell me that there is country that I will not need to pay tax?
and no I am looking to invest We purchase already 100 Mainer and we are looking the tax subject right now
Of course, there's a reason some countries are called tax havens, although I'm not an expert and wouldn't want you to have problems with the law in your country.
In some countries if you keep an investment for a certain period like 2 years, you are not taxed or have to pay a very low tax, so that's something to consider. In some countries, like Australia, you have to pay VAT with every transaction.
Do your own research.

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BitHodler
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May 01, 2017, 12:35:09 PM
 #6

In the US:

Mining income is taxed as ordinary income at the price on the day and at the time you mine the coins.

Profit/Loss while trading is taxed as a capital gain or loss.
Ok, let's say I mine 3 blocks each worth the standard subsidy plus the income in fees of let's say 1BTC per block. It means 13.5BTC of income per block and thus 40.5BTC in total.

I understand that officially you pay tax over the value at the moment you mined the coins, but does selling them at higher value at some later point require you to once again pay tax?

It could more or less fit in the category of trading/capital gains.

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May 01, 2017, 12:43:30 PM
 #7

In the US:

Mining income is taxed as ordinary income at the price on the day and at the time you mine the coins.

Profit/Loss while trading is taxed as a capital gain or loss.
Ok, let's say I mine 3 blocks each worth the standard subsidy plus the income in fees of let's say 1BTC per block. It means 13.5BTC of income per block and thus 40.5BTC in total.

I understand that officially you pay tax over the value at the moment you mined the coins, but does selling them at higher value at some later point require you to once again pay tax?

It could more or less fit in the category of trading/capital gains.

Correct.

First you would pay the tax on your income/profit during mining.  In your example you would pay tax on:

  [(40.5 BTC) x (the price at the time mined)] - (all expenses of mining including equipment depreciation)

Then when you sold them at a higher price you would need to pay taxes on the capital gains:

  (40.5 BTC) x [(price at the time of sale) - (the price at the time you mined them)]

Our family was terrorized by Homeland Security.  Read all about it here:  http://www.jmwagner.com/ and http://www.burtw.com/  Any donations to help us recover from the $300,000 in legal fees and forced donations to the Federal Asset Forfeiture slush fund are greatly appreciated!
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May 01, 2017, 03:00:35 PM
 #8

Thanks for confirming. I must admit, you'll probably fit in the category of far minorities that are honest about everything they make through mining and profit through trading.

I personally would not walk that exact same path as you do. Mainly because of the fact that I refrain from being used as a money tree by my local government.

I pay enough tax over everything that isn't Bitcoin related already, so why would I pay another load of taxes over my holdings and profits in Bitcoin? It doesn't make sense for me, and never will.

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May 02, 2017, 05:45:35 PM
 #9

I think every country has different regulation on taxes and other, if in my country until now there has been no government regulation mentioning tax payment about ownership or income obtained from bitcoin business either through trading mining or investment

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May 03, 2017, 06:43:25 AM
Last edit: May 07, 2017, 05:56:56 AM by Amph
 #10

In the US:

Mining income is taxed as ordinary income at the price on the day and at the time you mine the coins.

Profit/Loss while trading is taxed as a capital gain or loss.

I have paid the income tax on all the coins I have mined and the capital gains tax on all of my trading.

by your words it seems that you need to pay whatever you are going to exchange your coins or not?

this seems absurd, i was under the impression that as long you don't exchange you don't need to claim your capital, at best you need to declare the consumption, which in fact was payed with fiat

but if i pay in bitcoin my bills i should be fine with no tax, as long as i keep everything in bitcoin, with altcoin would even be more worse...
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May 03, 2017, 06:49:07 AM
 #11

I never had any mining profit as I am not in the mining but I pay tax for the transactions of conversion of bitcoin to fiat currency. I use a service and they charge 15% tax on transaction fees (aka mining fees) and it is different from the service charge levied by the service provider.

I usually use localbitcoins for smaller amounts (there is no tax as payment is sent directly from individual) and unocoin for larger amounts (where tax is charged on the transaction fees).

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May 03, 2017, 07:00:06 AM
 #12

In the US:

Mining income is taxed as ordinary income at the price on the day and at the time you mine the coins.

Profit/Loss while trading is taxed as a capital gain or loss.

I have paid the income tax on all the coins I have mined and the capital gains tax on all of my trading.

by your words it seems that you need to pay whatever you are going toe xchange your coins or not?
this seems absurd, i was under the impression that as long you don't exchange you don't need to claim your capital, at best you need to declare the consumption, which in fact was payed with fiat
but if i pay in bitcoin my bills i should be fine with no tax, as long as i keep everything in bitcoin, with altcoin would even be more worse...

If people had to pay taxes only when you exchange your goods (or bitcoins) for fiat, then most people will find ways to avoid taxes. Just stick to barter transactions, and you have to pay absolutely no taxes!
I hope that clarifies why you have to pay taxes if mining is profitable, whether you sell the bitcoins or not.
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May 03, 2017, 09:27:14 AM
 #13

In the US:

Mining income is taxed as ordinary income at the price on the day and at the time you mine the coins.

Profit/Loss while trading is taxed as a capital gain or loss.

I have paid the income tax on all the coins I have mined and the capital gains tax on all of my trading.

by your words it seems that you need to pay whatever you are going toe xchange your coins or not?
this seems absurd, i was under the impression that as long you don't exchange you don't need to claim your capital, at best you need to declare the consumption, which in fact was payed with fiat
but if i pay in bitcoin my bills i should be fine with no tax, as long as i keep everything in bitcoin, with altcoin would even be more worse...

If people had to pay taxes only when you exchange your goods (or bitcoins) for fiat, then most people will find ways to avoid taxes. Just stick to barter transactions, and you have to pay absolutely no taxes!
I hope that clarifies why you have to pay taxes if mining is profitable, whether you sell the bitcoins or not.
In the US even barter transactions are taxable.  However I expect most people do not fill out the form used to report taxes on barter transactions.  Also it is very difficult to calculate the tax.  If I give you one of my apples for one of your oranges then how much tax to we each owe?

The answer to the above question about mining income is yes, if your mining was profitable then you are required to pay tax on the profit even if you keep every single Bitcoin you make from mining and do not spend a single satoshi

By IRS rules you would need to do the following:

  • Keep a ledger showing every transaction that delivers mined Bitcoins to you.
  • Note the date, the amount of Bitcoins you receive and the price of Bitcoins on that date (use can use the average price over 24 hours).
  • At the end of the year you add up all of the USD you would have received if you had immediately sold all of the mined Bitcoins as soon as you had received them (even though you did not spend a single one).
  • That is our income from mining for the year
  • You can now deduct your expenses
  • You can deduct the cost of the electricity used to produce the Bitcoins, of if you live in your mother's basement and did not pay for the electricity then you have no electricity cost to deduct
  • You did buy the Bitcoin mining equipment so you can deduct the allowed depreciation value of the equipment (using section 179 you can deduct the entire cost of the equipment the first year but then you have nothing to deduct for all the income you get in any subsequent years)

When you go to spend the Bitcoins you mined or exchange them for USD then the cost basis for your capital gains tax on the coins is the amount you claimed as income in the above process for each lot of coins mined.

Our family was terrorized by Homeland Security.  Read all about it here:  http://www.jmwagner.com/ and http://www.burtw.com/  Any donations to help us recover from the $300,000 in legal fees and forced donations to the Federal Asset Forfeiture slush fund are greatly appreciated!
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May 03, 2017, 11:10:38 AM
 #14

Law is not the same in every part of the world. This is a country specific question.
It also depends on the amount of Bitcoins you're mining. If it's a hobby that brings you $100 a month nobody should care.

You want to tell me that there is country that I will not need to pay tax?and no I am looking to invest We purchase already 100 Mainer and we are looking the tax subject right now

When it comes to tax issues the law is dicey in most countries as there is no specific law yet to take care of income such as this. In my country for example, if I have a mining farm not too big to attract attention, I can avoid paying tax simply because of the way our financial system is as at the moment but this is not universal.

When you are now looking at the tax implications, this is something that should have been done even before the acquisition of equipment that should be part of your feasibility study, what if the law in your locality frowns at things like this and the tax could eventually kill the business, that means that all the investment have gone down the drain.
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May 04, 2017, 02:00:32 AM
 #15

In the US:

Mining income is taxed as ordinary income at the price on the day and at the time you mine the coins.

Profit/Loss while trading is taxed as a capital gain or loss.

I have paid the income tax on all the coins I have mined and the capital gains tax on all of my trading.

by your words it seems that you need to pay whatever you are going toe xchange your coins or not?
this seems absurd, i was under the impression that as long you don't exchange you don't need to claim your capital, at best you need to declare the consumption, which in fact was payed with fiat
but if i pay in bitcoin my bills i should be fine with no tax, as long as i keep everything in bitcoin, with altcoin would even be more worse...

If people had to pay taxes only when you exchange your goods (or bitcoins) for fiat, then most people will find ways to avoid taxes. Just stick to barter transactions, and you have to pay absolutely no taxes!
I hope that clarifies why you have to pay taxes if mining is profitable, whether you sell the bitcoins or not.
In the US even barter transactions are taxable.  However I expect most people do not fill out the form used to report taxes on barter transactions.  Also it is very difficult to calculate the tax.  If I give you one of my apples for one of your oranges then how much tax to we each owe?

The answer to the above question about mining income is yes, if your mining was profitable then you are required to pay tax on the profit even if you keep every single Bitcoin you make from mining and do not spend a single satoshi


I was actually agreeing with you and stating that barter cannot be used to avoid taxes.
Most countries have the concept of 'deemed' transactions - 'deemed sale', 'deemed dividends', etc. to make sure that you cannot avoid taxes.
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May 07, 2017, 05:59:24 AM
 #16

In the US:

Mining income is taxed as ordinary income at the price on the day and at the time you mine the coins.

Profit/Loss while trading is taxed as a capital gain or loss.

I have paid the income tax on all the coins I have mined and the capital gains tax on all of my trading.

by your words it seems that you need to pay whatever you are going toe xchange your coins or not?
this seems absurd, i was under the impression that as long you don't exchange you don't need to claim your capital, at best you need to declare the consumption, which in fact was payed with fiat
but if i pay in bitcoin my bills i should be fine with no tax, as long as i keep everything in bitcoin, with altcoin would even be more worse...

If people had to pay taxes only when you exchange your goods (or bitcoins) for fiat, then most people will find ways to avoid taxes. Just stick to barter transactions, and you have to pay absolutely no taxes!
I hope that clarifies why you have to pay taxes if mining is profitable, whether you sell the bitcoins or not.

how can they know how many coins you are holding? the beauty of bitcoin is that someone can hold millions of $ worth in bitcoin without anyone else knowing about their existence

there is no way for the IRS to know how many you generate via mining it's simply impossible, you can go ahead and claim the false or declare only 10%
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May 07, 2017, 09:38:27 AM
 #17

Of course you can always lie to the IRS and pay less in taxes than you should according to their regulations.

If you do not get caught then all is well - you are a winner!

If you get caught then you lose and you face:

  Paying the taxes anyway
  Paying interest on all the taxes you did not pay
  Paying huge fines
  Going to jail for tax evasion

This is true whether you hide income and capital gains using gold, Bitcoin, good old fashioned US dollars or any other means.

Our family was terrorized by Homeland Security.  Read all about it here:  http://www.jmwagner.com/ and http://www.burtw.com/  Any donations to help us recover from the $300,000 in legal fees and forced donations to the Federal Asset Forfeiture slush fund are greatly appreciated!
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May 07, 2017, 02:38:23 PM
 #18

No taxes are imposed from mining in third world countries, all profits need not be reported to the government because there is no law governing them. But personally I do not mind the income tax from this because the profits are more than enough.



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May 07, 2017, 03:13:14 PM
 #19

No taxes are imposed from mining in third world countries, all profits need not be reported to the government because there is no law governing them. But personally I do not mind the income tax from this because the profits are more than enough.
This is a new class of signature spammer.  The posts mostly make sense but they only visit a thread once, dump a post close to a turd but not close enough to be reported and then move on to another thread.  Looking at the post history they spread their "opinions" over the entire system and never revisit any threads.  Very annoying.  This could be cured by eliminating all paid signature campaigns.

Our family was terrorized by Homeland Security.  Read all about it here:  http://www.jmwagner.com/ and http://www.burtw.com/  Any donations to help us recover from the $300,000 in legal fees and forced donations to the Federal Asset Forfeiture slush fund are greatly appreciated!
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May 07, 2017, 07:25:15 PM
 #20

The answer to the above question about mining income is yes, if your mining was profitable then you are required to pay tax on the profit even if you keep every single Bitcoin you make from mining and do not spend a single satoshi

What happens if you don't hold the private keys to the mining address ?
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