As you know, the politics of taxation in the sphere of cryptocurrency due to the early stage of market development is still vague — even with such a large market as the United States.
A few days ago on the portal Reddit user, who asked to remain anonymous, has published a history of investing in digital currency — which began with an unexpected jackpot, she brought the trader to the question “I ruined my life because of trading cryptocurrencies?” — that’s what he titled his post.
In may 2017, a student of the American College invested $5000 in Ethereum (ETH), when the digital asset was worth about $50.
After ETH soared to $1281 and the cryptocurrency market as a whole was estimated at $800 billion, received a 25-fold return, i.e. $125 000 in ETH, the guy invested in several digital assets and projects initial placement of tokens (ICO), and by the end of December the portfolio reached $880 000.
“I took a chance to participate in a considerable amount of bad ICO at the beginning of 2018, I had some money in kainach, which is very sharply struck without any chance of recovery […] Today, my portfolio sits at $125,000, which is far from my $880 000. My estimated tax liability in 2017 — about $400 000,” — says the trader.
During the peak of the cryptocurrency on the market the net profit of the student investment of $5,000 was $875 000.
In the US cryptocurrency investors need to declare income subject to withholding, 1099-K, and many cryptocurrency exchanges such as Coinbase, have a system of registration taxes automating this process.
In March, after the exchange, “protecting their customers”, spent over a million dollars in the course of the conflict with the IRS (IRS), Coinbase introduced a new taxation tools to assist users in obtaining a complete picture of trading activity, the calculation of profit and loss and the filling of tax forms.
“The profit from the sale and exchange of digital currency is subject to taxation in the United States. For reference, here is the guide the IRS to provide information on income from digital assets. We understand that taxation of digital currencies can be complicated, because we have upgraded our tools for taxation to make the process of submitting information easier,” said the Coinbase team.
At the beginning of the year, the exchange has provided revenue form 1099-R for income trader that takes into account all income received during the calendar year. While the student withdrew its funds in the Bank account during this period, the results for trade crypto-crypto hit the profit taxable.
“It was a transaction of crypto-cryptocurrency (i.e. bitcoin – Ethereum, Ethereum Litecoin). They are subject to taxation, as I understand it. None of the steps I gave money in Fiat and not translated every single dollar received from these transactions to my Bank account,” explained captainvalor.
The USA is known for strict rules regarding the timely filing of tax statements — if the information is not filed with the IRS can be an established fact of non-reporting and further failure to pay the fine.
A trader working in a bookstore and earn $ 12 per hour, said that wanted to do payment of taxes, but “didn’t know where to start”. Currently, he already planned a consultation with a human rights activist working in the field of taxation, to search for solutions to the problem:
“I scheduled a consultation with a tax attorney specializing in cryptocurrency and alternative investments”.
He also thanked respondents for your advice and participation, noting that “these last few months have been a test of mental toughness”.
