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Author Topic: [2018-04-15] Will Coinbase Report My Bitcoin Gains to the IRS?  (Read 73 times)
Karartma1
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April 15, 2018, 03:39:27 PM
 #1

Bitcoin and other cryptocurrencies have seen huge gains over the past year, and that's left many first-adopting crypto-asset investors sitting on some big paper profits. Recently, the IRS has made it clear that it expects its tax revenue from sales of bitcoin and other high-flying digital currencies, and the tax service is working hard with other players in the cryptocurrency space to make sure that it can enforce investors' tax obligations.
Read more https://www.fool.com/taxes/2018/04/15/will-coinbase-report-my-bitcoin-gains-to-the-irs.aspx

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April 15, 2018, 06:46:43 PM
 #2

Every exchange will snitch on its users one way or another, which is why you should just pay your taxes. It's completely pointless to think that you will be free and safe from paying tax if you don't report your gains yourself. If the IRS loses its patience, which is just a matter of time, authorities can force every exchange to automatically hand over user information as part of their regulations.

I have never paid any tax over my gains till this year. It only concerns the coins I have been trading with on-exchange though. Everything sitting in my cold wallets will remain there because they haven't been sent to an exchange in years, and likely never will be in the future. Just think about it, the exchange has all your personal information, trading logs, deposit and withdrawal logs, etc. This information just needs to land into the hands of the government, and it eventually will happen, especially if you're a large scale trader.

I still find it funny how Coinbase thinks it has done a tremendous job in lowering the number of users it snitched on to 'just' 13,000. It's not a victory but a loss. The IRS got what it wanted after all; information concerning top value account holders. All other small scale traders are meaningless since they probably don't top the threshold anyway.

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April 15, 2018, 06:51:36 PM
 #3

If your gains / trade amount is above a certain level, yes.

A couple months ago the IRS requested access to coinbase accounts. Coinbase refused to provide this information and we're subsequently sued by the IRS.

They ended up losing

So yes, you can safely assume that the IRS has access to your Coinbase activity.

Here's a word of advice. If there is something the government cares about, it's their money. Don't try to cheat the IRS. Nearly everyone that does so eventually will get caught. You probably will get away with it today, but 10 years down the line it will come back and bite you, and when the IRS goes after someone, they go after them hard.
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April 16, 2018, 09:53:42 AM
 #4

This is actually about users in USA,what about users from others countries who use Coinbase,are they safe or one day Coinbase will share their data if another country's request such data?I think things should be done in the way that every user pay tax,so why IRS simply do not force exchanges to submits all data to them?If they can not find another way to do it,easy way is to play on terrorism card-this is always work there.

What I would like to see globally regarding exchanges and tax is automatic tax collection by exchanges,based on daily,weekly,month or year period.How much this is technically feasible I do not know,but imagine how easy this would be for users and how good it will be for tax offices/governments.

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Karartma1
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April 16, 2018, 05:44:24 PM
 #5

What I would like to see globally regarding exchanges and tax is automatic tax collection by exchanges,based on daily,weekly,month or year period.How much this is technically feasible I do not know,but imagine how easy this would be for users and how good it will be for tax offices/governments.
This happens with most trading online platforms for regular markets already: you get taxed directly by those companies.
I guess what will always be the pain point here is that if we are smart enough and good enough to store our crypto we will always find ways to avoid taxes and to jump from country to country with crypto. Or, at least, that's what I hope.

I am not interested in preserving the status quo; I want to overthrow it. Niccolò Machiavelli
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April 16, 2018, 09:03:46 PM
 #6

If your gains / trade amount is above a certain level, yes.
It was only users with dealt with over $20,000 total, and it was only users that did so between 2013 and 2015.  The vast majority of Coinbase customers' information has not yet been disclosed to the IRS, even the many high-value accounts that have been trading in the last couple of years.

The crypto world is still largely like the wild west, and Coinbase appears to be trying their best to keep their users' information safe, even though it seems like a futile battle.

Regardless of whether you're going to be reported in the next couple of years though, it's important to pay your taxes.  The situation could change at any time.


 
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April 16, 2018, 09:33:24 PM
 #7

This is actually about users in USA,what about users from others countries who use Coinbase,are they safe or one day Coinbase will share their data if another country's request such data?I think things should be done in the way that every user pay tax,so why IRS simply do not force exchanges to submits all data to them?If they can not find another way to do it,easy way is to play on terrorism card-this is always work there.

What I would like to see globally regarding exchanges and tax is automatic tax collection by exchanges,based on daily,weekly,month or year period.How much this is technically feasible I do not know,but imagine how easy this would be for users and how good it will be for tax offices/governments.

Countries already exchange information about bank balances and other details through CRS - Common Reporting Standards. So it would not be a stretch if details about bitcoin holdings/ gains are exchanged among countries as well. For this to happen though, Bitcoin has to become mainstream.


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April 16, 2018, 11:28:15 PM
 #8

Yes, if you've made more than 20K in profits on your crypto then they will report it to the IRS. 

Remember, you only pay crypto taxes when you sell so you won't owe anything on unrealized gains.

It's best to hold your crypto for over a year so you will pay the lower long term capital gain tax rate. 

On a related note, I expect some adjustments to how crypto taxes are calculated in 2018.  Currently, you pay taxes when you sell but also when you convert from one crypto to another.  This isn't an issue with Coinbase since it doesn't offer exchanges but is something that needs to change since it adds a lot of complexity to tax filing for smaller investors. 

Hopefully, we'll see some changes on this front with more Wall Street money coming into this space. 

Call me cynical but I think Washington will listen to Wall Street's concerns more than smaller crypto investors. 
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April 17, 2018, 09:32:04 AM
 #9

What I would like to see globally regarding exchanges and tax is automatic tax collection by exchanges,based on daily,weekly,month or year period.How much this is technically feasible I do not know,but imagine how easy this would be for users and how good it will be for tax offices/governments.
This happens with most trading online platforms for regular markets already: you get taxed directly by those companies.
I guess what will always be the pain point here is that if we are smart enough and good enough to store our crypto we will always find ways to avoid taxes and to jump from country to country with crypto. Or, at least, that's what I hope.

It is not problem when you only buy and hold cryptocurrency,in this case there is no tax.But at the point user want to convert crypto to fiat or buy something direct for crypto the problem arises.Recently the Spanish authorities have launched a major campaign to collect data from all companies which have connections with cryptocurrency,asking for all user data.So even if you use BTC as currency,person will need to prove the origin of that money.At the end tax will need to be pay at some point.



Countries already exchange information about bank balances and other details through CRS - Common Reporting Standards. So it would not be a stretch if details about bitcoin holdings/ gains are exchanged among countries as well. For this to happen though, Bitcoin has to become mainstream.

It's just a matter of time when will it happen,I suppose cryptocurrency is at this moment too small in terms of total value.One day when instead of billions, they are trillions of $ in this market the government will work hard to tax everything what can be taxed.

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April 17, 2018, 01:53:39 PM
 #10

Well probably, yes. Have you heard of the saying, "I love you but I love me more"? That is business. They are out to protect themselves, and if needed, they will expose each and every one just so they could secure their business interests. And this happens even if you are their biggest client. Who are you as compared to the government, by the way? So that is how it goes. In the US, most especially, the government would use all its power to ensure laws are faithfully executed and religiously followed by those who sojourn within the US territory. Hence, do not be shocked if later you find out you are exposed in regard your gains.
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April 17, 2018, 02:30:19 PM
 #11

Coinbase definitely will report,have no doubt about it
this sector is too fat to be overlooked by the authorities
but I don't think you should run and pay your taxes unless asked too,for many countries it is a grey area
if you live in the US,then yeah,maybe you would be better off paying them
and even then it differs from state to state

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RodeoX
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April 17, 2018, 02:37:28 PM
 #12

Of course they are. It is the law. It would be ridiculous to assume that a highly profitable, legitimate business would throw it all away to help you evade taxes. If you haven't filed yet you have until midnight. After that you will normally owe a 5% penalty.  You will also still owe any capitol gains.

Of course if you lost money you can claim a loss and reduce your taxes.  Wink

The gospel according to Satoshi - https://bitcoin.org/bitcoin.pdf

Free bitcoin in AFRICA - https://bitcointalk.org/index.php?topic=2710325.msg27720734
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April 17, 2018, 03:21:45 PM
 #13

The news article answered it directly:
Quote
What many investors don't understand is that even without the lawsuit, Coinbase was complying with IRS rules in providing certain information returns to the IRS.
But they are only providing information to customers who have at least 20,000$ in cash for sale of virtual currencies. So basically they are only targeting people who are earning a considerable amount with their exchange.

Looking at some response to this news it seems like they are seeing this as something negative when in fact they are helping the IRS get accurate tax information for their government. Imagine a lot of people earning thousands of dollars and not informing it to the government. It would be a not fair for people paying their taxes right.

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