Colorado is accepting crypto for tax payments - 2

[Davidvictorson]

I just read that Colorado is now accepting crypto as payment for tax. Apparently, it is in a bid to be seen as a pro-cryptocurrency state. They have joined the likes of Arizona, Wyoming and Utah that already have a sort of pro-crypto bill in its legislature with the aim of accepting tax payments in the form of digital currencies in varying degrees.

Just like is stated in the news article -  if you as a resident in Colorado wishes to pay for your  tax using bitcoin, you would have to pay more compared to choosing fiat payment option. Naturally, this wouldn't sit right with any person because in my opinion it actually defeats the purpose of being "pro-crypto".  Here is an illustration of the problem -

For example, let's say that, after calculating your 2022 taxes, you have a tax bill due to your resident state in the amount of $10,000. You pay this with $10,000 in Bitcoin (BTC tickers down $19,026) by the due date, April 15, 2023. If you bought that Bitcoin for $2,000, you now have triggered an $8,000 gain by disposing of that Bitcoin. You'll now have to pay tax on your $8,000 gain for the 2023 tax year — solely from paying your taxes with appreciated crypto.

Assuming the state doesn't listen to experts calling for them  to accept stablecoins instead of bitcoin as a means of payment as it could solve the issue of paying more on taxes, will you be willing to pay for your taxes in bitcoin knowing that you will be paying than your friend who is choosing the fiat option just because you want to support this initiative?

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[coinerer]

But if anything is done with Bitcoin it is good news for Bitcoin including whole cryptocurrency but Since it's a tax issue, even if they accept cryptocurrencies here, they should have preferred stablecoins because the price of other altcoins, including Bitcoin, constantly goes up and down.  If the price of Bitcoin increases then it will be a good profit for them.  But if the price of Bitcoin falls, then their tax amount will be much less in that year, which may cause problems for the  economy.

[Falconer]

No, I definitely wouldn't choose the bitcoin payment option for taxes if it was more expensive than fiat. I'm happy with bitcoin adoption, but when governments just want more profit and take advantage of price fluctuations to make your tax bill increase, then I think fiat options should be better.

Even if bitcoin has made it easier for users to pay bills or taxes, then I don't think people would be happy to do it when there are other cheaper options. In fact, many people still value money so I don't think they would sacrifice much more for a government that wants double profits.

[348Judah]

No, I definitely wouldn't choose the bitcoin payment option for taxes if it was more expensive than fiat. I'm happy with bitcoin adoption, but when governments just want more profit and take advantage of price fluctuations to make your tax bill increase, then I think fiat options should be better.

I still don't get the reason why paying in bitcoin should be inflated for tax payment, it's as simple as using the fiat, in fact more simpler to use bitcoin as points, this is not in a way to promote bitcoin for payment but it will discourage people from using the option and i think what they should focus is how to create enough services through which tax payment could engage making payments in different alternatives and not to intentionally inflict the bitcoin or crypto network and it's users with hight fees, this same kind of modern way of extortion is what most have ran away from in dealing with fiat financial system

Even if bitcoin has made it easier for users to pay bills or taxes, then I don't think people would be happy to do it when there are other cheaper options. In fact, many people still value money so I don't think they would sacrifice much more for a government that wants double profits.

I think their intention is to instill hardship on decentralized network users in paying their tax, they want them to pay the tax quite alright but in a hard way.

[kryptqnick]

It still amazes me how much of an autonomy a state in the USA seem to have. The legislation is them can be very different, and something outlawed in some can be legal in others. Of course, paying more in Bitcoin than in fiat doesn't sound good. It comes from basically needing to pay a tax... on paying a tax, right? A person pays taxes in Bitcoin, and then because it was in Bitcoin and if (which is very likely) the price changed over time since purchase till payment, you then pay another tax, for the gains you've made. Is it like that in all states (in the US) that allow paying taxes in BTC?

[Beefcake]

Bitcoin is valuable, dollars are not. I'd rather trade dollars for bitcoins, then the other way around. While it's good to see more uses for crypto, personally I would prefer to pay with dollars (inflationary by design), than bitcoins (deflationary by design). Especially in a climate of high inflation.

[SFR10]

You'll now have to pay tax on your $8,000 gain for the 2023 tax year — solely from paying your taxes with appreciated crypto.

What if the exact opposite of this happens? Does it mean any losses can trigger a tax-deductible event or is this one of those one-way solutions that's only in favor of the government?

will you be willing to pay for your taxes in bitcoin knowing that you will be paying than your friend who is choosing the fiat option just because you want to support this initiative?

It heavily depends on the gain... I wouldn't mind paying with Bitcoin if the gain is little to nothing.

[NotATether]

Note that in the US you do not have to pay taxes on crypto wages or crypto that is earned directly as a payment. It only applies to crypto that is bought with dollars (not stablecoins), and is sold on a later date.

E.g. my bitcoin cane only from work and other payments

[Vaskiy]

Note that in the US you do not have to pay taxes on crypto wages or crypto that is earned directly as a payment. It only applies to crypto that is bought with dollars (not stablecoins), and is sold on a later date.

E.g. my bitcoin came only from work and other payments

Why every country weren't able to practice this. So, you don't want to pay taxes. In that case for investors buying from Exchanges and other means need to pay tax based on the gain out of the capital.

My country hasn't said anything about the taxes on cryptocurrency that is being got as payments. When we're trading or selling we need to pay capital gains tax of 30% + 1% tds. The best way is to use cryptocurrency directly to avoid taxation, but the access is very limited.

[EarnOnVictor]

It's another welcome development if Colorado has truly joined other states in the US in accepting crypto. But it is a discouragement to be paying higher than necessary in the name of crypto. Yet, I must say that I understand the plight of the state because the price of crypto is not stable, who will now cover up for the short-come when there is depreciation in the price of the crypto?

This is a kind of insurance by the state, having carefully studied what challenges other states are currently facing.

[hugeblack]

If I had the choice to pay taxes in bitcoin or dollars, what would I choose?

It is undoubtedly good news, but if there is a choice, you will find that the majority will prefer to pay in dollars instead of bitcoin and that the government will not consider keeping the bitcoin so as not to waste tax money (it is reason enough not to vote for them)

It also allows governments to relentlessly impose taxes in exchange for a general legal cover for Bitcoin.