Americans lost $1.7 billion, more than half don’t know they can claim deduction

[henke1]

Americans lost $1.7 billion trading bitcoin in 2018 — and more than half don’t know they can claim a deduction
https://www.marketwatch.com/story/americans-lost-17-billion-trading-bitcoin-in-2018-and-more-than-half-dont-know-they-can-claim-a-deduction-2019-01-15?siteid=rss&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A%20marketwatch%2Ffinancial%20(MarketWatch.com%20-%20Financial%20Services%20Industry%20News)

[Harlot]

That's what happens when you jump right in the hype train without any experience whatsoever on both trading as well as tax management. People always see the opposite they think that when something is rising in value it is their perfect opportunity to jump in while the whole truth is they are too late to participate. Now some of them are also screwing up their tax report by not maximizing their tax deductions which they won't be able to claim back. Knowledge is really what any investors need before jumping at something.

[squatter]

Americans lost $1.7 billion trading bitcoin in 2018 — and more than half don’t know they can claim a deduction

Judging by the facts that came out of the Coinbase/IRS case, not many people are paying their cryptocurrency-related taxes anyway. If they're not paying on capital gains, they definitely shouldn't be deducting for capital losses.

The allowed deduction is pretty minimal, anyway. Even though you can carry forward capital losses from year to year, the yearly limit on capital loss deductions is $3,000. So if you lost $3,000 or more in 2018, that's the most you can deduct from your taxable income for the year.

[buwaytress]

Americans lost $1.7 billion trading bitcoin in 2018 — and more than half don’t know they can claim a deduction

Judging by the facts that came out of the Coinbase/IRS case, not many people are paying their cryptocurrency-related taxes anyway. If they're not paying on capital gains, they definitely shouldn't be deducting for capital losses.

The allowed deduction is pretty minimal, anyway. Even though you can carry forward capital losses from year to year, the yearly limit on capital loss deductions is $3,000. So if you lost $3,000 or more in 2018, that's the most you can deduct from your taxable income for the year.

I was actually quite curious to see if the numbers for Coinbase user tax returns had gone up. Coinbase kept saying they'd fight the court decisions but finally gave in, yet their growth didn't seem to have slowed down at all so I'm guessing US people using it don't mind divulging tax details (and paying it). Hard to tell till we see figures.

It was strange enough that online gambling losses weren't reported for deductions (now that US seems to want to ban it entirely), maybe people in general just don't realise losses are deductible?

[squatter]

It was strange enough that online gambling losses weren't reported for deductions (now that US seems to want to ban it entirely), maybe people in general just don't realise losses are deductible?

It's different for gambling. Professional (self-employed) gamblers can deduct losses as a business expense, so they only pay taxes on their net gains. Casual gamblers aren't allowed to deduct losses if they take the standard deduction, so those people pay taxes on all of their wins and can't deduct any of the losses.

Professional traders can similarly deduct capital losses as a business expense, limiting taxable income to net gains. Non-professionals have to cap those deducted losses at $3K which is much worse.

One might ask, why doesn't everyone just report as self-employed? The answer is that self-employed people pay an additional 15.3% tax on top of the personal income tax.

The IRS screws you no matter what!