Pay your tax folks. Whatever you do, if you sold Bitcoin Ethereum whatever Cryptocurrencies, if you converted it to fiat through bank account, you better claim tax. Anything amount money sitting in your bank the IRS or government have record of it, you can think of it as the bank voluntarily gave it to the IRS or government by default. So once again do your tax properly.
Let say you sold $100 of Bitcoin and you have record of it you bought it for $60, then you would only claim $40 as taxable. To keep this simple, you can account this $40 into your other income. If you want a clear complicated way to do this, then fill out the proper form like stocks investments, purchase date amount, sold date amount, fees associate with the transactions, long term or short term then the total actual taxable. The bottom line is report it, do not ignore it, better to report it than to ignore it.
There are people saying that it’s better not to report then cheat. That is correct, do not cheat your tax, meaning you’re making $10,000 on W-2 but you cheat by saying $5,000, cheat mean that you loss money on investment but in fact you profit. Not reporting is as bad because the amount you owe to the government will have interest over time and additional fees will be added on top of that since the government will do the tax for you they will charge you 100 times higher than the tax preparer, howver if it’s over 5 years I think IRS will start looking for you by letters of warning then eventually garnish your pay check or bank …
So it’s better to report the amount you profit at least, in this case sold $100, in which $40 is taxable, while the $60 was your initial investment (capital) and it’s long term if the time you purchase vs the time you sold is over 12 months, if less than 12 months then it’s short term.
Just report the gain if you’re too lazy. Report it that’s the bottom line, because government have records without requesting or looking into your bank account and see the amount $ coming from coinbase, bitstamp binance or whatever Cryptos exchange you’re using and they are flagging these incoming transactions as Cryptocurrencies they know you have Cryptocurrencies, don’t lied, don’t cheat.
On Friday, February 7, 2020, 06:03:17 PM EST, BlockFi Product Updates <[email protected]> wrote:
BlockFi does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only and is not intended to provide, nor should be relied on for tax, legal, or accounting advice. You should always consult your own tax, legal, and accounting advisors before engaging in any transaction.
Our goal is to make financial products simple and easy to use. As tax season approaches, we want to make sure you have everything you need to properly file taxes.
We recently mailed out 1099-MISCs. If you live in the United States and earned over $600 in interest during 2019, you should be receiving yours shortly, if you haven’t already. In accordance with IRS requirements, if you earned less than $600 in interest and bonuses you will not receive a 1099-MISC, but should still report any crypto income amounts on your tax return. For more information, please consult our recent blog post.
We’ve received some questions on whether you need a 1099-MISC from us if you took out a loan. If you use our loan products you will not receive tax forms from us. In some instances, interest paid on loans may be tax deductible. Your full loan payment history for tax reporting purposes is available on Scratch. We always recommend that you consult your tax advisor as individual circumstances will vary.
In the coming weeks, you will be able to download your tax forms and year-end statements directly from your BlockFi account dashboard. We’ll let you know when this feature is available.
BlockFi Live with TaxBit
To provide additional crypto tax insight, our Founder and CEO Zac Prince recorded an episode of BlockFi Live with the CEO of TaxBit, a leading crypto tax software. BlockFi clients are eligible for a discount on TaxBit’s services – read more about this special offer here.
As always, you should consult your tax advisor for information relating to your specific facts and circumstances. If you have additional questions, contact us anytime at [email protected].
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