Not filing taxes with bitcoin

[haploid23]

So I have bought and sold plenty of btc, and haven't filed a single bitcent to the IRS. So what? I do it rather openly and don't care much about hiding my paper trail (coinbase, exchanges, purchases on websites, etc).

Now how are they actually going to implement and enforce taxation of bitcoin transactions? Currently the infrastructure to actually regulate the taxation of bitcoin is nearly non-existence, and it's solely based on the honor system. Sure you could believe the conspiracy that the governments are already tracking bitcoin transactions, but I don't buy it. So again, why should I comply, and what happens when I don't?

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[n2nshad0w]

I applaud your openness, I came in search of what was the right, or wrong way to deal with this subject..  I'm persistently pursuing more and more mining equipment, in hopes of eventually being self employed.

[mnmShadyBTC]

This will eventually lead to you getting audited by the IRS and resulting you to have to pay the taxes due plus penalties and interest. It is likely that coinbase will report your sales to the IRS so your tax return may not even be accepted.

[Soros Shorts]

There is a chance that you might get randomly audited for some other reason not related to Bitcoin. As part of the audit the IRS would likely ask you for all your bank statements for the last X years. If they see something strange in those statements they could ask for more information which may eventually reveal your unreported Bitcoin transactions.

[cryptoanarchist]

Be afraid! Be very afraid! Bwa-ha-ha-ha-ha

Seriously though, I have my own thread on this. The IRS and the rest of the people running USA don't even follow their own rules anyway, so why should the rest of us?

The way I see it is pretty simple. They are no different than any other criminals. They have lots of guns. No imaginary good guys are going to protect you from them. You, and only you, are responsible for protecting yourself via armed resistance if necessary.

[keithers]

So I have bought and sold plenty of btc, and haven't filed a single bitcent to the IRS. So what? I do it rather openly and don't care much about hiding my paper trail (coinbase, exchanges, purchases on websites, etc).

Now how are they actually going to implement and enforce taxation of bitcoin transactions? Currently the infrastructure to actually regulate the taxation of bitcoin is nearly non-existence, and it's solely based on the honor system. Sure you could believe the conspiracy that the governments are already tracking bitcoin transactions, but I don't buy it. So again, why should I comply, and what happens when I don't?

Depending on the amount of deposits into your actual bank account, you may be exposing yourself to a risk of an audit.   If the IRS red flags you for an audit, you will have to be able to produce receipts for everything that you have written off on your taxes, and  you will have to pay taxes on all the unclaimed gains.   The crappy part is that you would probably get audited for the previous 3 years. 

Worst case is your bank accounts get frozen and they start garnishing your wages...  If you are burying a couple hundred bucks that is one thing, but if you are not claiming tens of thousands, that is a different beast entirely

[Ron~Popeil]

I don't file mine either. My bit coin is not owned by them and I will not pay them for the privilege of using them.

[bluemountain]

I don't file mine either. My bit coin is not owned by them and I will not pay them for the privilege of using them.

This is not how it works. If you are a US citizen then you owe taxes on all of your income regardless of where you earn it. This is the law.

[keithers]

from what I have heard so far, you definitely do not want to be claiming losses from BTC at this point (as a write off on your taxes).   Even though it is quite possible for some people to have lost some money due to bad timing over the last year, since BTC is so new, it is almost like an instant way to get audited.   

[jjc326]

from what I have heard so far, you definitely do not want to be claiming losses from BTC at this point (as a write off on your taxes).   Even though it is quite possible for some people to have lost some money due to bad timing over the last year, since BTC is so new, it is almost like an instant way to get audited.   

Agreed, I think there have a couple threads about people getting investigated or audited because they counted mining as a loss against other income, which is just plan stupid at this point. 

[keithers]

from what I have heard so far, you definitely do not want to be claiming losses from BTC at this point (as a write off on your taxes).   Even though it is quite possible for some people to have lost some money due to bad timing over the last year, since BTC is so new, it is almost like an instant way to get audited.   

Agreed, I think there have a couple threads about people getting investigated or audited because they counted mining as a loss against other income, which is just plan stupid at this point. 

Exactly...and the most you can claim in the losses is 3k (I believe), which isn't nearly worth the hassle of an audit, or the amount that you would likely be paying to the IRS after an audit

[zetaray]

I think the IRS is targeting large mining facilities or pools, miner retailers, may be gambling sites. I do not belief they are clamping down on individuals, yet. Enjoy your honeymoon while you can.

[Ayers]

it depend how you sold those btc, if it is face to face, then they can't track you back so easily, otherwise via exchange you will get in troubles some day(here also it depend on the amount)

[Panthers52]

it depend how you sold those btc, if it is face to face, then they can't track you back so easily, otherwise via exchange you will get in troubles some day(here also it depend on the amount)

Even with face to face trades you will still receive cash that you would either deposit in the bank or spend somehow. The IRS can look at your standard of living and decide that it is too high for your reported income.

[Mobius]

I think the IRS is targeting large mining facilities or pools, miner retailers, may be gambling sites. I do not belief they are clamping down on individuals, yet. Enjoy your honeymoon while you can.

I would say the IRS is targeting large exchanges that are not complying with AML regulations and face to face traders who are charging large premiums (and not reporting anything "suspicious" to law enforcement).

[Mobius]

from what I have heard so far, you definitely do not want to be claiming losses from BTC at this point (as a write off on your taxes).   Even though it is quite possible for some people to have lost some money due to bad timing over the last year, since BTC is so new, it is almost like an instant way to get audited.  

Just because you are audited doesn't mean anything bad will happen to you. If you have done nothing wrong then an audit will be nothing more then a small headache. If you accurately report your income and don't over report your deductions then nothing bad will happen to you, and if you were to under report your deductions you could receive a refund.  

[lucaspm98]

If they have evidence that you are hiding something, they could search your home, computers, etc. for hidden assets. Although that would be rare.

Actually, you writing this post is probably enough evidence to start an investigation.

[Ayers]

it depend how you sold those btc, if it is face to face, then they can't track you back so easily, otherwise via exchange you will get in troubles some day(here also it depend on the amount)

Even with face to face trades you will still receive cash that you would either deposit in the bank or spend somehow. The IRS can look at your standard of living and decide that it is too high for your reported income.

what about i keeps them in my house, and use them for something like food or other thing that cannot be trackable?
for example if i convert 1M(i declare to IRS only 100k) and use the rest only for food/things that not generate invoice ecc..they can't do nothing i think

[Ron~Popeil]

I don't file mine either. My bit coin is not owned by them and I will not pay them for the privilege of using them.

This is not how it works. If you are a US citizen then you owe taxes on all of your income regardless of where you earn it. This is the law.

When they start following their laws I might do the same. In the mean time good luck proving how much I own and where it is.

[Mobius]

it depend how you sold those btc, if it is face to face, then they can't track you back so easily, otherwise via exchange you will get in troubles some day(here also it depend on the amount)

Even with face to face trades you will still receive cash that you would either deposit in the bank or spend somehow. The IRS can look at your standard of living and decide that it is too high for your reported income.

what about i keeps them in my house, and use them for something like food or other thing that cannot be trackable?
for example if i convert 1M(i declare to IRS only 100k) and use the rest only for food/things that not generate invoice ecc..they can't do nothing i think

If you use cash to buy things like food, then you would not need to spend the "income" money that you earn to buy food so you could use that money to buy other things. Remember that money is fungible so it doesn't matter which dollar you use to buy something as long as you use a dollar.