BTC and taxes

[WEB slicer]

just to be clear, i'm not trying to evade paying tax. i want to pay and be in the clear. i just want to pay the least amount that's legally possible.

[1713933352]

1713933352

[charliemaggot]

they don't have to prove anything, i do. and if i can't prove it they got me.

This is correct. If the IRS thinks you are in the wrong, it is on you to prove your position. It is also on you to keep records and so if you can't show the source of your income, they will treat it as the maximum possible tax rate.

my CPA did mention it would be more cost effective to skip the cash out and straight trade my BTC for property but it's going to be very hard to accomplish this.

If this is treated as a barter then you will have received income of the value of the property, which will be taxed as income and might be more than using long-term capital gains.

If you originally mined your coins, then it's going to be income, but if you said you received them when the price was low then that's good news as your income will be low. However, between now and then the price has risen so there will be capital gains taxes to pay.

If you bought them at a low price, again, if you cash out you will owe capital gains taxes. The rate is banded depending on how much and how long you've owned them. But since it sounds like it's been more than a year, depending on your other income, you'll be able to get up to approx. the first $400k at 15% tax, and anything over will be 20%.

If you have only owned the coins for a year or less (or traded them during the year), then it is going to be taxed as income, up to 39.6%.

If you can't prove your cost basis in an audit, they will take the worst case, i.e. income.

There is no simple tax avoidance scheme if you just want the cash now but your accountant may be able to come up with ways to defer taxes depending on where you put it. Transferring into trusts, for example.

[WEB slicer]

i heard about long term capital gains is taxed less, but are you sure it's 15% for the first 400K ?

trust's have not been discussed and i have no knowledge how they work, can you provide an example?

[ShibaWow]

why would you need to tax it?

sell them at localbitcoins.com

get them in cash, no taxes

[bitmarket.io]

who says you have to report your coins to the IRS?

you can report it to any taxing agency in the world. they all want your money. it's stateless money. create a virtual office in Ireland and open up a bank account there and deposit all your exchange fiat into it.

[charliemaggot]

Long-term capital gains are taxed at 0% when your income is less than $36k (for a single person), 15% when it's less than $400k, and 20% thereafter. Income is anything you have earned.

For example, say you are paid $20k/yr, you can have about $16k worth of long-term gains taxed at 0%. The next $365k of long-term gains is taxed at 15%. Anything over is going to be taxed at 20%. So if you had $300k long-terms gains in one tax year, you'll pay about $42.6k in tax. (all this is approximations because deductions, exemptions, etc will change the value and if you're married, the limits are higher).

Trusts, donations, contributions to retirement, are all ways to defer taxes but typically because the money isn't for you or now,. It isn't a way to avoid taxes for you but is if you are planning to save or give money away.

You are going to pay taxes somewhere. Long-term gains rates (assuming your coin are long-term) are a good deal.

[WEB slicer]

i noticed if your filing status is "head of housedhold" instead of "single" you can report up to 49K. gonna look in to how you can qualify for that filing status. i don't have children but i am the caretaker for my grandmother.

[BitsBitsBits]

Does anyone know how this works in Europe? I've been cashing out a couple of bitcoins now and then and til now no one has said a word about it. Should I tell the people responsible for taxes that I am cashing out bitcoins?

[charliemaggot]

You only get to use long-term gains if they were long term (you owned the coins for more than a year - and can prove it), and it was in the year you cashed out. If you are cashing out in 2014, it's income for 2014.

You don't get to use previous years allowances if you never received the money. However, if you did cash out last year you should have reported them already (or filed an extension), or amend your return to include them.

Your accountant will be able do all this for you. You need to just let him deal with it.

[charliemaggot]

Does anyone know how this works in Europe? I've been cashing out a couple of bitcoins now and then and til now no one has said a word about it. Should I tell the people responsible for taxes that I am cashing out bitcoins?

Most countries treat gains made from Bitcoin as capital gains. The rules depend where you live. Likely and technically, you should be reporting gains. However, some places like the UK, for instance, have a personal allowance where the first £10k gains are ignored.

[bitmarket.io]

just talk to lawyers and accountants that specialize in reducing your taxes down to zip. 

i recommend Orrick (http://www.orrick.com/)

[WEB slicer]

just talk to lawyers and accountants that specialize in reducing your taxes down to zip. 

not gonna happen

[bitmarket.io]

just talk to lawyers and accountants that specialize in reducing your taxes down to zip.  

not gonna happen

you'll be losing out. it's common practice among the wealthy. some even renounce their citizenships to avoid paying taxes. that's what edwardo co-founder of facebook did after he received his share.  and there's nothing illegal about it.

http://www.forbes.com/sites/briansolomon/2012/05/11/eduardo-saverin-renounces-u-s-citizenship-ahead-of-mega-facebook-ipo/


hey it's your money and your life. good luck.

[WEB slicer]

i really doubt anybody is going to be able to reduce my taxes to nothing. even if i pay the federal government nothing on capital gains i still have to pay on acquisition and 5% to my state.

that guy was not born in the US and he now lives in singapore. most people do not want to flee the country. i don't think you fully understand the depth of what you are suggesting.

[bitmarket.io]

i really doubt anybody is going to be able to reduce my taxes to nothing. even if i pay nothing on capital gains i still have to pay on acquisition and 5% to my state.

that guy was not born in the US and he now lives in singapore. most people do not want to flee the country. sure not paying tax is nice but i don't think you fully understand the depth of what you are suggesting.

who cares if you are born in a country or not. citizenship is citizenship.

go give the government all your money! the IRS needs it to piss it away. make sure you give them every penny you have. or they may just can you.

[WEB slicer]

i don't want to flee the country.

you're not being helpful and you are acting like an asshole.

[bitmarket.io]

i don't want to flee the country.

you're not being helpful and you are acting like an asshole.

I think it's fucking dumb not to leverage legal means to reduce the amount of taxes you owe.    That doesn't mean you need to 'flee'.

[WEB slicer]

you are being an asshole you also posted in my thread about KNC not refunding people saying we won't get our money back. who the fuck are you? go crawl back in the hole you came from. nobody gives a fuck what you think.

[bitmarket.io]

you are being an asshole. you also posted in my thread about KNC not refunding people saying we won't get out money back. who the fuck are you? go crawl back in the hole you came from. nobody gives a fuck what you think.

Usually the people that get scammed don't end up getting their money back.

I don't live in a hole. But it seems like you're about to.

[WEB slicer]

piss off