IRS FORM 1040 "Digital Assets

[larry_vw_1955]

larry_vw_1955, there is a law to cryptocurrency, but it's a general one. According to this law, it is forbidden to use cryptocurrencies instead of money, but it is not forbidden to exchange them for money. If we talk about declaration forms, there are none.

But Russian law does not separate income from cryptocurrencies into a separate declaration. If you have received income from any activity, you are obliged to declare it. But if you receive income in fiat, selling cryptocurrency, but the tax authorities will probably never find out about it. But all bank operations are controlled by the tax authorities, and if the bank account will receive more than 600000 rubles (a little more than 6000 dollars) per month, the bank is obliged to conduct its own check and pass the data to the tax authorities.

if you use somewhere like coinbase here in the usa, i think they send out a 1099-misc but only if you made more than $600. if you made less than that then they don't send the form and the irs doesn't know anything. so i guess thats like free tax free income. if people don't get that form in the mail there is no way they are going to voluntarily report anything...

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[zasad@]

larry_vw_1955, there is a law to cryptocurrency, but it's a general one. According to this law, it is forbidden to use cryptocurrencies instead of money, but it is not forbidden to exchange them for money. If we talk about declaration forms, there are none.

But Russian law does not separate income from cryptocurrencies into a separate declaration. If you have received income from any activity, you are obliged to declare it. But if you receive income in fiat, selling cryptocurrency, but the tax authorities will probably never find out about it. But all bank operations are controlled by the tax authorities, and if the bank account will receive more than 600000 rubles (a little more than 6000 dollars) per month, the bank is obliged to conduct its own check and pass the data to the tax authorities.

if you use somewhere like coinbase here in the usa, i think they send out a 1099-misc but only if you made more than $600. if you made less than that then they don't send the form and the irs doesn't know anything. so i guess thats like free tax free income. if people don't get that form in the mail there is no way they are going to voluntarily report anything...

If you look at the statistics of the average salary in the US, it's $4,300. I took the data from here, and it looks about right to me.
https://visasam.ru/emigration/canadausa/zarplata-v-ssha.html

600 dollars or a little more is a small amount and I think traders invest a lot more than that and make a lot more profit or loss.

If a trader trades on Coinbase, of course he will have to learn the laws and pay all the taxes.  But this is not the only way to trade in the US.

[larry_vw_1955]

If you look at the statistics of the average salary in the US, it's $4,300. I took the data from here, and it looks about right to me.
https://visasam.ru/emigration/canadausa/zarplata-v-ssha.html

seems kind of low. i don't think most people here in the usa would be happy just making that amount. although to some people in other parts of the world it might seem like alot, to people in the usa it is really not very much at all. poverty level in some places. to be honest.

600 dollars or a little more is a small amount and I think traders invest a lot more than that and make a lot more profit or loss.

but that's the thing though. lets say you have a coinbase debit card and spend $10,000 worth of bitcoin using that debit card in one year. coinbase is not going to issue you a form 1099-misc still. i think they only do that if you got staking earnings or something like that. they don't keep track of your trading profits or losses so if they don't send you a 1099-misc then the irs knows nothing about it, i'm assuming. i think that's a legal way to avoid paying taxes on bitcoin maybe. not sure.

but if i bought coffee i'm sure not sitting down trying to figure out costs bases and things like that...

If a trader trades on Coinbase, of course he will have to learn the laws and pay all the taxes.  But this is not the only way to trade in the US.

it's how most people trade. they used a centralized exchange.

the REAL way to avoid paying taxes on all crypto is to hold it in an IRA like this one:

https://bitcoinira.com/about-us

BitcoinIRA is the world’s first and most trusted crypto IRA platform for investing in cryptocurrencies with self-directed IRAs. We aim to make the complex process of saving for retirement simpler and safer. Our team strives to give our clients the educational materials and tools needed to help them reach their retirement goals.


the problem is, if i have to transfer my crypto to someone else's possession it is a NO GO. after what happened to places like Celcius, FTX, and lest we forget BlockFi, there's only one thing worse than losing your crypto in a BlockFi interest earning savings account and that would be letting it sit in a bitcoin IRA product from some company for 20 or 30 years and then when you are getting ready to make your first withdrawal, they go belly up.

the IRS really needs to revamp and allow people to create their own self-custodied bitcoin ira so they don't have to trust third parties with their bitcoin and other crypto because then it just becomes another situation like block fi potentially...

also i'm not a big fan of having to pay someone $500 per year just so i can have an IRA. that's stupid. because it's like the company is holding me hostage saying they won't let me off the hook for paying capital gains to the IRS unless I pay THEM instead. 

[zasad@]

larry_vw_1955, One Russian IT security engineer said a brilliant phrase: “What can leak, will definitely leak.”
To put it simply, all data stored on different platforms will be transferred to the state or hackers will sell it to scammers. Even if the platform does not contain your personal data, the details of your transactions can also convey a lot of information about you.
To invest in cryptocurrencies, a smart user does not need any platforms. I bought cryptocurrency for cash and I sold cryptocurrency for cash.

[larry_vw_1955]

larry_vw_1955, One Russian IT security engineer said a brilliant phrase: “What can leak, will definitely leak.”
To put it simply, all data stored on different platforms will be transferred to the state or hackers will sell it to scammers. Even if the platform does not contain your personal data, the details of your transactions can also convey a lot of information about you.
To invest in cryptocurrencies, a smart user does not need any platforms. I bought cryptocurrency for cash and I sold cryptocurrency for cash.

i'm talking about investing in bitcoin through an IRA so you don't have to pay any taxes. from what i've seen, at least on the bitcoinIRA website, you have to transfer your bitcoin into THEIR custody.

the bitcoinIRA website says this:

Up To $250M² Custody Insurance
Assets are insured for up to $250 million with BitGo and their insurance provider Lloyd’s of London, the world’s specialist insurance and reinsurance market


I would imagine that most people that see that have no idea how to verify if it is actually true and have no real understanding of what it really means.

[zasad@]

larry_vw_1955, One Russian IT security engineer said a brilliant phrase: “What can leak, will definitely leak.”
To put it simply, all data stored on different platforms will be transferred to the state or hackers will sell it to scammers. Even if the platform does not contain your personal data, the details of your transactions can also convey a lot of information about you.
To invest in cryptocurrencies, a smart user does not need any platforms. I bought cryptocurrency for cash and I sold cryptocurrency for cash.

i'm talking about investing in bitcoin through an IRA so you don't have to pay any taxes. from what i've seen, at least on the bitcoinIRA website, you have to transfer your bitcoin into THEIR custody.

the bitcoinIRA website says this:

Up To $250M² Custody Insurance
Assets are insured for up to $250 million with BitGo and their insurance provider Lloyd’s of London, the world’s specialist insurance and reinsurance market


I would imagine that most people that see that have no idea how to verify if it is actually true and have no real understanding of what it really means.

When people say IRA to me, I first think of the Irish Republican Army (IRA), which fought for Irish independence.
A person does not need custodial intermediaries to invest in cryptocurrencies. If your cryptocurrencies are stored on other people's wallets, you no longer own them. The founder of the Bitcoin project wanted to free you from custodial intermediaries, but you don't want to free yourself from the shackles and keep saying that you need a custodial intermediary.

[larry_vw_1955]

When people say IRA to me, I first think of the Irish Republican Army (IRA), which fought for Irish independence.
A person does not need custodial intermediaries to invest in cryptocurrencies. If your cryptocurrencies are stored on other people's wallets, you no longer own them. The founder of the Bitcoin project wanted to free you from custodial intermediaries, but you don't want to free yourself from the shackles and keep saying that you need a custodial intermediary.

The benefit of having your crypto in an IRA here in the united states is, you don't have to file reports on your activities. and you don't have to pay any taxes. buy and sell all you want. no reporting. no paying taxes or anything. why wouldn't someone want that type of setup?

in order to have that type of setup though you have to setup an IRA. so if that can be done without involving a 3rd party, that might be a good thing. i just don't know if people do that. and if not why not. maybe because they are lazy and just go with sites like bitcoinIRA i dont know...

[zasad@]

When people say IRA to me, I first think of the Irish Republican Army (IRA), which fought for Irish independence.
A person does not need custodial intermediaries to invest in cryptocurrencies. If your cryptocurrencies are stored on other people's wallets, you no longer own them. The founder of the Bitcoin project wanted to free you from custodial intermediaries, but you don't want to free yourself from the shackles and keep saying that you need a custodial intermediary.

The benefit of having your crypto in an IRA here in the united states is, you don't have to file reports on your activities. and you don't have to pay any taxes. buy and sell all you want. no reporting. no paying taxes or anything. why wouldn't someone want that type of setup?

in order to have that type of setup though you have to setup an IRA. so if that can be done without involving a 3rd party, that might be a good thing. i just don't know if people do that. and if not why not. maybe because they are lazy and just go with sites like bitcoinIRA i dont know...

Ok, I'll try to read up on bitcoinIRA because I don't understand how a third party custodial service allows US citizens to avoid paying taxes.
If an experienced user wants to stay in the shadows, then he will not use custodial services. There are a lot of projects on the Internet for exchanging cryptocurrencies without KYC.
If you can briefly explain to me how bitcoinIRA works, I will be grateful to you.

[larry_vw_1955]

Ok, I'll try to read up on bitcoinIRA because I don't understand how a third party custodial service allows US citizens to avoid paying taxes.

That's what IRA's are allowed to do is grow your retirement savings without paying any taxes UNTIL you start taking distributions. But if you set up a Roth IRA, there are no taxes when you start taking distributions since it was funded with "after-tax" money. Very simple. Alot of financial service companies offer IRAs, but most of them only let you invest in more traditional things like the stock market. Here in the USA that is...

If you can briefly explain to me how bitcoinIRA works, I will be grateful to you.

Think of it as a centralized exchange that you can trade crypto among various things like BTC, ETH and other major cryptocurrencies. Buying and selling all you want without having to file anything with the IRS. All that buying and selling can create a major reporting requirement otherwise. So I guess an IRA is a way to do away with that type of thing.

[zasad@]

Ok, I'll try to read up on bitcoinIRA because I don't understand how a third party custodial service allows US citizens to avoid paying taxes.

That's what IRA's are allowed to do is grow your retirement savings without paying any taxes UNTIL you start taking distributions. But if you set up a Roth IRA, there are no taxes when you start taking distributions since it was funded with "after-tax" money. Very simple. Alot of financial service companies offer IRAs, but most of them only let you invest in more traditional things like the stock market. Here in the USA that is...

If you can briefly explain to me how bitcoinIRA works, I will be grateful to you.

Think of it as a centralized exchange that you can trade crypto among various things like BTC, ETH and other major cryptocurrencies. Buying and selling all you want without having to file anything with the IRS. All that buying and selling can create a major reporting requirement otherwise. So I guess an IRA is a way to do away with that type of thing.

I have never encountered this in my country. If I invest money in my retirement account, which is managed by the fund of my choice, then I will receive my money only after retirement and these payments will not be subject to taxes. If I don’t live to see retirement, my heirs will receive this money. But such an investment has a big disadvantage. If a pensioner starts receiving a pension and dies a couple of months later, his heirs will not receive the remaining money.

__

And you didn't explain an important point. If I trade on a centralized IRA exchange and make a profit, which I then transfer to my bank account, how can I then not have to pay taxes? It looks fantastic.

[larry_vw_1955]

And you didn't explain an important point. If I trade on a centralized IRA exchange and make a profit, which I then transfer to my bank account, how can I then not have to pay taxes? It looks fantastic.

that depends on if you're withdrawing your contributions or earnings. but once you reach 59.5 years old you can withdraw whatever you want to no penalty no taxes no nothing. no reporting no nothing. anyone can correct me if they don't think i'm right.  

Direct contributions to a Roth IRA (principal) may be withdrawn tax and penalty-free at any time.[12] Earnings may be withdrawn tax and penalty-free after 5 years if the condition of age 59½ (or other qualifying condition) is also met.

https://en.wikipedia.org/wiki/Roth_IRA

[zasad@]

And you didn't explain an important point. If I trade on a centralized IRA exchange and make a profit, which I then transfer to my bank account, how can I then not have to pay taxes? It looks fantastic.

that depends on if you're withdrawing your contributions or earnings. but once you reach 59.5 years old you can withdraw whatever you want to no penalty no taxes no nothing. no reporting no nothing. anyone can correct me if they don't think i'm right.  

Direct contributions to a Roth IRA (principal) may be withdrawn tax and penalty-free at any time.[12] Earnings may be withdrawn tax and penalty-free after 5 years if the condition of age 59½ (or other qualifying condition) is also met.

https://en.wikipedia.org/wiki/Roth_IRA

This is some kind of tricky pension fund that the regulators haven’t gotten to yet.
I have already written a hundred times why such services cannot be used. You can earn 10-30% per year, but you may lose your entire investment. This is incorrect risk management.

[larry_vw_1955]

This is some kind of tricky pension fund that the regulators haven’t gotten to yet.

IRAs are a thing. Maybe you don't live here in the USA but in the USA that's what people use.

I have already written a hundred times why such services cannot be used. You can earn 10-30% per year, but you may lose your entire investment. This is incorrect risk management.

No you can't earn 10 to 30% per year. Why would you think that. The real issue with them is you are handing over your money to a third party. So they should be insured and well, do your own due diligence...

[zasad@]

This is some kind of tricky pension fund that the regulators haven’t gotten to yet.

IRAs are a thing. Maybe you don't live here in the USA but in the USA that's what people use.

I have already written a hundred times why such services cannot be used. You can earn 10-30% per year, but you may lose your entire investment. This is incorrect risk management.

No you can't earn 10 to 30% per year. Why would you think that. The real issue with them is you are handing over your money to a third party. So they should be insured and well, do your own due diligence...

I think the real problem here is completely different. The idea of Satoshi was for people to be free and their savings to be free from banks and pension funds and to manage their coins independently, and after 15 years people think that their bitcoins are safer to store with centralized intermediaries.

[larry_vw_1955]

I think the real problem here is completely different.

there's not just one "real problem" there's multiple ones. one of them is having to pay taxes on your bitcoin. biden is trying to tax wealthy people now on their UNREALIZED gains at 44% do you know what that means? satoshi, if he was alive and american and biden's bill passed, satoshi would owe almost half his bitcoins to the IRS and they would be tracking him down so fast his head would spin. 

The idea of Satoshi was for people to be free and their savings to be free from banks and pension funds and to manage their coins independently, and after 15 years people think that their bitcoins are safer to store with centralized intermediaries.

some people are incapable of managing private data and will end up losing their private keys and all of their bitcoin. satoshi probably didn't think too much about that aspect of things but it exists. and it really is problematic.

[zasad@]

I think the real problem here is completely different.

there's not just one "real problem" there's multiple ones. one of them is having to pay taxes on your bitcoin. biden is trying to tax wealthy people now on their UNREALIZED gains at 44% do you know what that means? satoshi, if he was alive and american and biden's bill passed, satoshi would owe almost half his bitcoins to the IRS and they would be tracking him down so fast his head would spin.  

The idea of Satoshi was for people to be free and their savings to be free from banks and pension funds and to manage their coins independently, and after 15 years people think that their bitcoins are safer to store with centralized intermediaries.

some people are incapable of managing private data and will end up losing their private keys and all of their bitcoin. satoshi probably didn't think too much about that aspect of things but it exists. and it really is problematic.

About taxes, my point was that taxes need to be paid. But if the tax rate is just prohibitive, you don't have to be an idiot.
Rich people have the best tax advisors in the world and will always find a way to minimize taxes.

In other words what you are saying is that some people should remain slaves to the system.

[larry_vw_1955]

About taxes, my point was that taxes need to be paid. But if the tax rate is just prohibitive, you don't have to be an idiot.
Rich people have the best tax advisors in the world and will always find a way to minimize taxes.

Rich people dont pay taxes from what i've heard. That's how they got rich in the first place. Keeping all that money and using it to make more.

In other words what you are saying is that some people should remain slaves to the system.

No, I'm saying some people should put their crypto with custodians. Because they are incapable to managing private data over the longterm without losing it. That's if they insist on being involved in crypto at all. If not then so much the better. I'm doing them a favor by having that opinion. As harsh as it may sound. Dont get involved in crypto unless you are really good at keeping private data secure for the longterm.

[zasad@]

About taxes, my point was that taxes need to be paid. But if the tax rate is just prohibitive, you don't have to be an idiot.
Rich people have the best tax advisors in the world and will always find a way to minimize taxes.

Rich people dont pay taxes from what i've heard. That's how they got rich in the first place. Keeping all that money and using it to make more.

In other words what you are saying is that some people should remain slaves to the system.

No, I'm saying some people should put their crypto with custodians. Because they are incapable to managing private data over the longterm without losing it. That's if they insist on being involved in crypto at all. If not then so much the better. I'm doing them a favor by having that opinion. As harsh as it may sound. Dont get involved in crypto unless you are really good at keeping private data secure for the longterm.

If you look at the lists of the richest people in the US and the amount of taxes paid, you will realize that rich people and their companies pay high taxes. But each case needs to be analyzed individually, because in the USA there are a lot of benefits for different companies in different areas and the largest benefits are in the AI direction.

larry_vw_1955, why are you making excuses? The system does everything to ensure that the majority of people are its slaves. If this is not the case, then it is a bad system.

[larry_vw_1955]

If you look at the lists of the richest people in the US and the amount of taxes paid, you will realize that rich people and their companies pay high taxes.

i don't need to look at a list of rich people. i know of one rich person and i know exactly how he avoids paying any taxes. but he has a huge income and he does it legally. its very simple.

larry_vw_1955, why are you making excuses? The system does everything to ensure that the majority of people are its slaves. If this is not the case, then it is a bad system.

a bad system for who? the majority of the people?

i heard biden is trying to make it a felony if you don't file your tax return for 3 out of 5 years and then the penalty would be jail time and maybe something more. that's part of his budget proposal for 2025. it applies to rich people. not working folks.  

i think i heard it may be a 5 year jail term. just enough time to get acclimated to life on the inside...