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Taxes and Crypto
Posted on 2/8/21 at 6:40 pm
Posted on 2/8/21 at 6:40 pm
I understand that this year the IRS is requiring positive or negative confirmation that you have dabbled in crypto trades when you file and have ruled all crypto as property (not currency) , essentially wanting folks to report their gains.
I know everyone on MoneyTalk is an above board tax reporter, but what means does the IRS have to actually audit this? Does Coinbase or any other exchange report holdings? What about folks who move crypto to cold storage?
I know everyone on MoneyTalk is an above board tax reporter, but what means does the IRS have to actually audit this? Does Coinbase or any other exchange report holdings? What about folks who move crypto to cold storage?
8
Posted on 2/8/21 at 7:23 pm to HurricaneDunc
we all hate paying taxes. Don't do this
Posted on 2/8/21 at 7:28 pm to HurricaneDunc
You don’t have to pay taxes on bitcoin my dude, it’s anonymous
We are legion dude
We are legion dude
Posted on 2/8/21 at 7:42 pm to HurricaneDunc
How do you turn crypto to cash in your bank account?
That is how they will find it
Also could see required reporting on crypto payments
That is how they will find it
Also could see required reporting on crypto payments
Posted on 2/8/21 at 8:17 pm to el Gaucho
quote:
You don’t have to pay taxes on bitcoin my dude, it’s anonymous
Your online wallet service and or exchange isn’t
Posted on 2/8/21 at 8:17 pm to HurricaneDunc
I don’t think Coinbase reports holdings but they are required to report taxable transactions
Posted on 2/8/21 at 8:20 pm to Weagle25
And a taxable transaction meaning a deposit or withdrawal greater than 10k?
Posted on 2/8/21 at 8:22 pm to HurricaneDunc
A taxable transaction would be selling any amount of crypto or using crypto to buy something or using one crypto to buy a different type of crypto
They might have a threshold for what they have to report. I would think it’s under 10k
They might have a threshold for what they have to report. I would think it’s under 10k
This post was edited on 2/8/21 at 8:25 pm
Posted on 2/8/21 at 9:07 pm to HurricaneDunc
Coinbase is filing 1099-Miscs with the IRS for 2020 but not 1099-Ks or Bs. I don’t see how the IRS would know your gains otherwise.
LINK
LINK
This post was edited on 2/8/21 at 9:11 pm
Posted on 2/8/21 at 9:23 pm to HurricaneDunc
Just did my taxes today. My CPA told me they are about to find out everyone who has Bitcoin. He was not trying to scare me and is really smart. He had to ask me and we were talking about it. I don't have any but he did mention IRS subpoenaing them. Idk how it all works with Bitcoin and I don't have any so I am probably missing some details as I wasn't paying attention as much. You know they want that tax money so I'm sure they will find a way just no telling how long.
This post was edited on 2/9/21 at 7:26 am
Posted on 2/8/21 at 9:26 pm to ReadyPlayer1
Hypothetically, I’m mixed on what someone with crypto holdings but potentially no gains would do here with their bullshite yes/no question. People don’t have to identify non taxable events such as buying stock and not selling it.
Beyond that, wondering how people with gains will handle this.
Beyond that, wondering how people with gains will handle this.
Posted on 2/8/21 at 10:18 pm to lighter345
quote:
Hypothetically, I’m mixed on what someone with crypto holdings but potentially no gains would do here with their bullshite yes/no question. People don’t have to identify non taxable events such as buying stock and not selling it
Here's the question on 2020 Form 1040:
"At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?"
If you did not buy or sell any, or exchange any, then I think you can answer no.
Now, the IRs considers crypto to be property, not currency. So if you used 1 bitcoin to buy, for example, a car, then you would have to answer yes, and report the gain.
As far as the ole "will they find out" question? I can tell you the IRS is putting a lot of resources into trying to find out.
Posted on 2/8/21 at 10:25 pm to LSUFanHouston
quote:
I can tell you the IRS is putting a lot of resources into trying to find out.
this seems like a losing battle for people using cold wallets but what do I know
Posted on 2/8/21 at 10:25 pm to HurricaneDunc
All of my coins are on cold storage. I still pay taxes each year. Link my exchange APIs to bitcoin.tax and it will tell me how much I have to pay, or get to write off as losses.
Posted on 2/8/21 at 10:27 pm to LSUFanHouston
I can’t imagine it worth being the risk of not filing and getting caught, for most people. I hate taxes, but I’m not planning on going down for not paying them.
Anyway, I guess this year I will have to sign up for coin tracker.io. They track it for you, but they aren’t cheap.
Anyway, I guess this year I will have to sign up for coin tracker.io. They track it for you, but they aren’t cheap.
Posted on 2/8/21 at 10:30 pm to LSUFanHouston
So what if I deposited money into a offshore sports book, withdrew money using Bitcoin, but do not technically have any gambling winnings because total amount deposited by CC >> than the amount withdrew via bitcoin?
Posted on 2/8/21 at 10:31 pm to JJJrich
quote:If you withdrew in BTC, there is no tax event. However, if you trade that BTC for USD or another coin, your cost basis would be whatever the USD value was when you withdrew the BTC from the sportsbook (if you can prove that). If you can't prove that, your cost basis is $0 and you get taxed on the entire value when you make a taxable transaction
So what if I deposited money into a offshore sports book, withdrew money using Bitcoin, but do not technically have any gambling winnings because total amount deposited by CC >> than the amount withdrew via bitcoin?
This post was edited on 2/8/21 at 10:32 pm
Posted on 2/9/21 at 1:13 am to TigerTatorTots
quote:
your cost basis would be whatever the USD value was when you withdrew the BTC from the sportsbook (if you can prove that)
Luckily Coinbase tells me the USD spot price at the transaction. So to make sure I am doing this correctly when inputting into turbo tax for each transaction:
I am not inputting my weekly purchases of btc.
My cost basis is the usd spot price at time of receiving btc from the sportsbook*quantity of btc received sportsbook, then for proceeds it is the usd spot price at time of converting btc*quantity of btc converted.
I am typically buying, selling, and converting the btc to usd in the same day so total gain/loss is pretty small.
Am I doing this right? Going into this I was worried I was going to owe alot, but my total net is a loss for the year.
Posted on 2/9/21 at 1:31 am to HurricaneDunc
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