What is the current tax status of crypto-currency in the USA?

[o_e_l_e_o]

I think it is premature to start paying taxes on crypto.

Look, I agree with you. The IRS have no idea what they are doing, the people they employ don't know how to properly tax crypto trades, and the guidance they have issued falls far short of being comprehensive or even useful. But that's not how the IRS see it. If you are on their radar, they may well be coming after you. They've started sending out threatening letters just last week to a list of people they presumably acquired from Coinbase.

You can't expect USA citizens to pay taxes on it since the president of the USA claims Bitcoin is essentially fake and bogus and not a valid form of money.

Irrelevant, I'm afraid. The president also thinks global warming isn't real and the British were using planes during the Revolutionary War.

The IRS is claiming that Bitcoin is "property" but they still think it is fake money.

Because currency and property are two different things as far as taxes are concerned. They obviously will class it as property so they can extract the maximum amount of tax revenues from it.

With bitcoin, it will still be very easy to evade tax and I think it is the more reason why bitcoin is the major threat to government and banks

It is far easier to evade tax with cold, hard cash than it is with bitcoin.

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[exstasie]

Is it the users fault for not understanding all the tax laws?

That's typically how the IRS approaches things. If you screw up, it's on you.

There are still too many unknown variables to take the IRS seriously about this. I think it is premature to start paying taxes on crypto.

Sure there are unknown variables. And there's lots of stuff you can probably get away with tax free like P2P trading, offshore exchanges, and spending on goods/services. But be smart about it. Don't just sell a bunch of coins on Coinbase and not pay the taxes. That's exactly who they're looking at right now with this letter campaign.

[iMark]

The main thing is that the tax inspectorate does not have any evidence that you actually own a cryptocurrency or have income from a cryptocurrency market.  Otherwise, no conversations will help and you will have to answer for unrecorded income.

Maybe they don't have that proof if you don't trade it in exchange. Just look at the Binance US exchange that is used exclusively for US citizens because Binance cannot combine global and US users, because the US has strict regulations on exchanges.

Well not only at binance but bittrex, KuCoin and other exchanges must have the same rules for US citizens. Where they have to do the KYC to report their taxes, not only that, many platforms do not accept US citizens because US regulations are quite strict with the crypto platform.

It turns out to be US citizens quite troublesome they have to report their finances, including financial transactions in crypto. but there are still many exchanges outside that don't use KYC right? that means tax for US users is only partial, and I'm not sure the tax on crypto will be effective be implemented

[Pipdips]

The IRS is like a real estate agent.  They find where deals are going down and then jump out in front of it and say they want a piece of the pie too.

The IRS is a private company.  All those bozos can do is send letters.  The IRS can never show up to your house.  They can just send letters.

I'd like to see Bitcoiners take a new and bolder stance on this tax topic.  I think the IRS is going to be completely outnumbered when it comes to taxing Bitcoin. There very well could be a revolution brewing with a global currency and the light bulbs will eventually all turn on for the masses.  I think The People will decide that Bitcoin is non-taxable, not the IRS.

[figmentofmyass]

The IRS is a private company.  All those bozos can do is send letters.  The IRS can never show up to your house.  They can just send letters.

no, it's a federal agency. they have a criminal enforcement division, agents with guns that come arrest you......the whole nine yards. ain't you ever heard of al capone? https://en.wikipedia.org/wiki/Al_Capone#Tax_evasion

I'd like to see Bitcoiners take a new and bolder stance on this tax topic.  I think the IRS is going to be completely outnumbered when it comes to taxing Bitcoin. There very well could be a revolution brewing with a global currency and the light bulbs will eventually all turn on for the masses.  I think The People will decide that Bitcoin is non-taxable, not the IRS.

technically, we need a new tax code to accomplish that. that would need to be passed through congress. good luck with that......the whole electoral/legislative system is corrupt.

[BitHodler]

I know that we have privacy coins, and these ones claims that they have fully covered all these part where you can make transactions that will not been seen at all.

That actually remains to be seen. It wouldn't surprise me if agencies have a way to take off the private jacket and expose the underlying transaction. We just assume they are private because they haven't really been stress tested enough.

They will not openly admit that they can already crack these transactions. It's better to make it appear that privacy coins are actually private-- the illegal use will automatically be driven in that corner and therefore easier to bust.

I add more value to a good old mixing process than using something that people think/believe is offering privacy, but might not do so in reality at all. Most of these privacy coins are overly hyped too. No thank you.

Just pay your taxes and be done with it. Transactions that are confirmed are public information for ever.

[Pipdips]

Did Satoshi ever mention anything about the taxing of Bitcoin?

[FanEagle]

The IRS is like a real estate agent.  They find where deals are going down and then jump out in front of it and say they want a piece of the pie too.

The IRS is a private company.  All those bozos can do is send letters.  The IRS can never show up to your house.  They can just send letters.

I'd like to see Bitcoiners take a new and bolder stance on this tax topic.  I think the IRS is going to be completely outnumbered when it comes to taxing Bitcoin. There very well could be a revolution brewing with a global currency and the light bulbs will eventually all turn on for the masses.  I think The People will decide that Bitcoin is non-taxable, not the IRS.

Of course, they would surely be outnumbered, and how can they even tax what is yet to be regulated, except maybe they just want to have a fixed tax for companies running blockchain technology system. The physical tax collectors in my country even lacks the capacity to control the ones they can physically manage, talk less of managing a digital tax. In my country, not every company pays tax, they only go after the companies that they know about.

Maybe as a result of hype or so. Most of the companies that even operate solely online in my country including my own company has never been once bothered for tax, so it think cryptocurrency would really make the job very hard for them now if people start using it and that is why they may introduce fix tax.

[atjiat]

I have repeatedly heard such news that in some States, the Senate officially makes decisions to legitimize cryptocurrencies as digital securities and recognize cryptocurrencies as real assets.  It seems to me that if senators at the local level make such decisions, then soon such decisions will be made in Congress.

[Spaffin]

Some countries, which occupy a very high position in world politics, create a certain structure, thanks to which they will fight against economic crimes.  When this whole process starts, the cryptocurrency will definitely be under special control to avoid fraud and abuse of cryptocurrency in the field of economic crime.  If this problem is resolved, then I think that there are no problems for the legalization of cryptocurrency in the United States of America legally and then taxes will be levied accordingly, if not for every cryptocurrency user, then from trading exchanges and that's for sure.

[micher143]

I can’t even imagine how to track a person who has a cryptocurrency. If, of course, the person himself came and said all his data or trades large sums, then this may attract attention in transactions from his wallet. But people who trade not large amounts of cryptocurrency are not worth tracking.

I think they are only taxing the cryptocurrency exchange, because for me there's no way to know if you are a crypto user or not, you will just get caught when you broadcast it to the world haha, but yeah I think the crypto exchange is included and those who are running a business.

[beerlover]

I can’t even imagine how to track a person who has a cryptocurrency. If, of course, the person himself came and said all his data or trades large sums, then this may attract attention in transactions from his wallet. But people who trade not large amounts of cryptocurrency are not worth tracking.

You can track it quite simply really. What you have to do as a government is not to track each individual person, you just track the exchanges and tell them if they don't give government the information they require they will be shut down.

So, places like coinbase notifies the government all the moves you do, it could be deposit/withdraw/trade doesn't matter, they will let the government know and send them a file with every single person who has done any moves that day every day. This is why governments can tax Americans who do crypto trades so easily, they are not tracking YOU specifically, they just blackmail the companies so they can get more information, that way if they ban the crypto trades people would do it illegally but this way they make it legal but taxable.

[sana54210]

I can’t even imagine how to track a person who has a cryptocurrency. If, of course, the person himself came and said all his data or trades large sums, then this may attract attention in transactions from his wallet. But people who trade not large amounts of cryptocurrency are not worth tracking.

I think they are only taxing the cryptocurrency exchange, because for me there's no way to know if you are a crypto user or not, you will just get caught when you broadcast it to the world haha, but yeah I think the crypto exchange is included and those who are running a business.

I think that the United states are accepting it more as digital assets and which people are using to trade, and since it is taxable, they are more concerned about the tax itself which is what will be their own benefit and I think that is good anyway, at least, that will serve  as bribe for them to allow us too to be able to use our cryptocurrency peacefully lol.

I think that they felt they cannot have control of it before, but now that they know it can be regulated and they can still get what they have been getting from fiat through its usage, they want to regulate it and which I think is the reason why they have tried to invite binance to establish a separate platform for their own citizens where they can have full control over the income of their people through binance exchange.

[BitHodler]

You can track it quite simply really. What you have to do as a government is not to track each individual person, you just track the exchanges and tell them if they don't give government the information they require they will be shut down.

I'm not sure if they will actually threaten exchanges to be shut down because they do operate globally, but I'm sure they can come up with something like taking away their licenses or having some of their bank accounts be closed.

If you bully exchanges long enough, they'll lose so much in revenue and profit that they don't have much of a choice to cooperate. I would just recommend people to pay their taxes because you'll be busted eventually anyway.

You are not private. It's stupid to think that you can get away with not declaring the gains you make on an exchange, especially when you're using Coinbase. It sucks to do so initially, but it saves you a lot of money in the long run.