US IRS tax reporting for cryptocurrencies


#323

Yeah i came in during the Nov 2017 craze. I was up say $5k going into the year but obviously didn’t sell.

Say I am down as of 2018. I had to pay $5k gainz for 2017? What the?! How do you have money to pay for it if you don’t actually have it on hand?


#324

I think if you trade (exchange between cryptocurrencies or fiat) and your gain is $5K, then you pay tax of your gain. However, if you bought and hodl, then no tax.


#325

I think most people here didn’t just buy btc and hodl. I believe most here did some sort of trading from btc/eth to alt and try to make money but didn’t cash out of the market yet. I still work a job but feel like the potential my portfolio is not even close to final form lol


#326

EXACTLY! WTH?! Its like you’re penalized for being a long term HODL’R. This is what was discussed in previous chat sessions in the pub but no clear answer. @peter Care to elaborate rather than a “like” this time ?


#327

Sure. Hodl with conviction!


#328

Guys, there lots of crypto tax resources out there now. Even here in the pub with previous topics. Lots of services that try to make filing easier too. I use https://www.zenledger.io but there’s a bunch more, even free ones. I suggest you guys take a look. It will at least get you started. When in doubt, see a CPA.


#329

This is not true for the US.

If you only purchased say Coins on Coinbase and held on to them or mined coins and held on to them then there isn’t any taxes owed until those coins are traded for FIAT or another asset. But say you purchase Etherum on Coinbase send it to Binance to purchase an alt then the purchasing of said alt triggers a possible taxable transaction. This is due to the price of Etherum changing between when you purchased it and then traded it for the alt.

This is also why I feel it is very important that we have more exchanges like Coinbase where we can purchase more coins directly for FIAT. If you want to HODL this is how you should purchase your coins as this allows you to do long term investing with out ever worrying about short term gains. Also the more exit ramps we have the better.

@edwin - This has been discussed in multiple threads at great length. It is not a penalty for long term HODL ing. If you are disciplined and send the BTC/ETH as soon as you get to your Binance/(what ever exchange) then there is very little taxes owed. This is very true in the current market and can also be mitigated by how the BTC/ETH price is calculated. ie. moving average, daily average, spot price which ever is chosen you need to stay consistent. Again get a CPA these rules are not new they have been around for ages with the stock market traders. Just because they are new to the vast majority of crypto enthusiasts doesn’t make them new. We by trading crypto’s are trying to play ball with the big boys its time to step up / level up your game.


#330

I don’t feel it is a penalty. The key is knowing when to get in and out the market and plan for taxes on a calendar year basis. What a lot of my clients say is that they didn’t expect to pay taxes on crypto so they just weren’t thinking about it. Many have also said if the market was still doing well, they wouldn’t mind paying the taxes. They are worried now because portfolio values are low.

As Nekko said- these rules have been around long standing. Stock market folks go through this. Now it is being applied to crypto.


To clarify-
There are taxes to be paid for mined coins. Mined coins are considering income per the Notice.

Here is the Notice for anyone who wants to read through it. Mining is answered on question 8.


#331

Yeh forgot about the income tax on mined coins. Was totally thinking just about the trading aspect.