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Author Topic: US citizens, do you pay taxes on bitcoin exchange?  (Read 2415 times)
highlevelminer
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April 16, 2012, 11:03:54 PM
 #41

I avoid the direct transfer of bitcoin into any time of government monitored currency so I don't really have that problem.

Just stick to low key online services which accept bitcoins as a form of payment.

This is why having a well paying corporate job pays off in the end kids Smiley

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triplehelix
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April 17, 2012, 03:27:09 AM
 #42

https://bitcointalk.org/index.php?topic=76938.0

So, about 2 months ago I went to H&R Block to get my taxes prepared.  I explained to the lady, who apparently was very experienced and had worked there for many years, about Bitcoin.  At the time, she told me that she was unsure of how to treat Bitcoin with regards to taxation -- is it a business?  Is it a hobby?  Is it an investment?

Well, 2 days ago I finally got my answer.  After asking the 5 longest-working members at that particular H&R Block location AND after calling the IRS, the lady said that Bitcoin is a hobby.  She knows that I buy precious metals with Bitcoin, knows that I have money in accounts all over the globe, and knows that I have conducted business deals and have provided services specifically dealing in Bitcoin.  I even showed her an old TradeHill check of some of my profits.
simplelove
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April 17, 2012, 03:34:57 AM
 #43

US doesnt even pay that much anyways. we Canadian buys or bitcoins from american. SO if it sucks for them it sucks for us
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April 17, 2012, 06:27:45 AM
 #44

How would you and/or the IRS/revenue-service-of-your-country prove or disprove gains/losses?
That's not how the tax system works in the United States. Other than the specific cases where there is mandatory reporting, neither you nor the IRS needs to prove anything.

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April 17, 2012, 07:27:44 AM
 #45

Taxes are due by midnight!

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April 17, 2012, 05:51:47 PM
 #46

If USD is made we are supposed to claim it. It seems BTC turned into USD would be taxed as additional income but I am no CPA.
Made 50K USD plus 1K USD from BTC. 51K USD to tax as far as the IRS sees it.
Not being recognized as anything of value by government it doesn't seem to fit capital gains tax.


highlevelminer
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April 17, 2012, 08:23:07 PM
 #47

Yeah I can't imagine the us government wasting any more money as it is to investigate claims of possession of anonymous currency so I would say all the tax dodgers and illegal buisiness owners are safe for now.

Besides the bitcoin more than likely will be profitable in the long run especially seeing as how the endurance of the currency is implied by the very algorithm that runs it.

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JoelKatz
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April 17, 2012, 08:56:05 PM
 #48

If USD is made we are supposed to claim it. It seems BTC turned into USD would be taxed as additional income but I am no CPA.
Made 50K USD plus 1K USD from BTC. 51K USD to tax as far as the IRS sees it.
It all depends *how* you make it. If it was earned income (like a salary paid in bitcoin), then it would be taxed as a barter even if you haven't sold the bitcoins. If it was a gift, it would be taxed as a gift.

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Not being recognized as anything of value by government it doesn't seem to fit capital gains tax.
It doesn't matter whether the government considers it a thing of value or not. If you bought it for price X and sold it for price Y, that could be a capital gain. If you received it in exchange for labor, it's a barter.

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triplehelix
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April 17, 2012, 11:13:06 PM
 #49

Besides the bitcoin more than likely will be profitable in the long run especially seeing as how the endurance of the currency is implied by the very algorithm that runs it.

the algorithm doesn't imply anything other than the technical merit.  profitability has nothing to do directly with the technical details of bitcoin.  the algorithm enables the things that give bitcoin its value, specifically the security to allow it to be used as a value transfer mechanism, but its the actual use that gives it its value.

you want bitcoin to be worth more?  spend your bitcoins on products and services.  ironic i know, but there you go.
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April 18, 2012, 07:41:35 AM
 #50

Interesting thread. One thing I was considering is starting an LLC for to operate BitCoin mining rigs under. I have a few other business ideas that I have been floating that could operate under the same LLC and if it worked I would be able to separate my personal finances from the LLC’s I then give myself a salary (in the off chance I actually made money). I doesn’t cost much to start an LLC and it offers some protections from taxes and liabilities. For instance all your equipment and power investment can be written off as a loss. You can also write off the deprecation of your equipment as it ages. I have no idea if any of this is relevant or even worthwhile, it’s just something that was rattling around in my head. 
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April 18, 2012, 07:48:40 AM
 #51

tax is intermediary when online exchanges are concerned
it is taken off when u initiated sumthing from ur bank or exchange fees
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April 23, 2012, 12:45:11 PM
 #52

Interesting thread. One thing I was considering is starting an LLC for to operate BitCoin mining rigs under. I have a few other business ideas that I have been floating that could operate under the same LLC and if it worked I would be able to separate my personal finances from the LLC’s I then give myself a salary (in the off chance I actually made money). I doesn’t cost much to start an LLC and it offers some protections from taxes and liabilities. For instance all your equipment and power investment can be written off as a loss. You can also write off the deprecation of your equipment as it ages. I have no idea if any of this is relevant or even worthwhile, it’s just something that was rattling around in my head. 
I think this is a great idea!
Why give a state more of your hard-earned money when they have their hands in your pockets anyway‽

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jbob06
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April 23, 2012, 07:43:28 PM
 #53

isn't the entire point of BTC to get around this?
EhVedadoOAnonimato
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April 23, 2012, 07:53:09 PM
 #54

isn't the entire point of BTC to get around this?

+1  Cheesy
triplehelix
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April 24, 2012, 03:08:58 PM
 #55

isn't the entire point of BTC to get around this?

no
Red Emerald
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April 24, 2012, 06:06:20 PM
 #56

isn't the entire point of BTC to get around this?

no
+1

The point of BTC is not tax evasion. The point is actually being able to own and transfer your own money.

ktrade
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April 25, 2012, 01:02:37 AM
 #57

btc is supposed to be independent of other currencies, so you shouldn't be taxed at all.
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April 25, 2012, 01:09:39 AM
 #58

btc is supposed to be independent of other currencies, so you shouldn't be taxed at all.
That isn't true.  If you got paid in chickens, you would pay taxes based on the USD value of the chickens. It doesn't matter that you aren't paid in USD.

EhVedadoOAnonimato
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April 25, 2012, 07:44:17 AM
 #59

isn't the entire point of BTC to get around this?

no
+1

The point of BTC is not tax evasion. The point is actually being able to own and transfer your own money.

Which by itself is a way to evade the worst tax of all: inflation. If you like giving your wealth to your government, than keep using fiat.

BTC is a good tool for tax evasion in internet transactions. I just hope more and more people realize it.
EhVedadoOAnonimato
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April 25, 2012, 07:45:29 AM
 #60

btc is supposed to be independent of other currencies, so you shouldn't be taxed at all.

FTFY.
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