Bitcoin tax

It’s been months since the news of the bitcoin tax hit the internet. The U.S. Internal Revenue Service (IRS) has sent a warning letter to the approximately 10,000 people who trade in Bitcoin announcing its new policy on tax collection. According to the IRS, Bitcoin is no longer a free collateral asset, but an asset that needs to be declared to the authorities.

What is the relationship between the IRS and the Bitcoin tax?

The IRS treats digital currencies in the same way as stocks. In other words, cryptocurrencies and stocks fall into the same category of property. So, when you buy a cryptocurrency, when you sell it (if you hold it for more than 1 year), you also have to pay long-term capital gains tax. If you buy/sell cryptocurrencies on a regular basis, whether long-term or short-term, the IRS sees it as your income and charges you with the same logic. However, the actual situation can be a little more complicated than this. For this reason, we recommend that you visit Bitcoin Tax for a more detailed understanding. However, holding your cryptocurrency for longer will make your tax management easier. Also, if you hold the coin for more than one year, you will also have to pay less tax. Either way, you pay the same tax every time you sell Bitcoin.

What if I was one of 10,000 people who received the IRC letter?

The name is still anonymous and the IRS does not appear to be willing to disclose it. What we do know is that in March of last year, cryptocurrency exchange Coinbase forwarded some of its records to the IRS by federal order. The IRS record request requirement was that they wanted to know a trader with more than $20,000 USD in cryptocurrency. In other words, most of the people who received the letter had traded more than $20,000. What we all need to remember is that Bitcoin is no longer a hidden free asset when buying, but no longer a hidden free asset when taking a profit. If an employer pays a salary in cryptocurrency, it must also be reported to the authorities as the employee’s income. Of course, the employee himself/herself also reports. Reporting is mandatory for traders, regardless of where the IRS can get that information.

Are cryptocurrency taxes only in the US?

The answer is “no”. Each country has a different position on cryptocurrency. However, it follows the rule that if all countries equally buy Bitcoin, it is unlikely to be taxed. One of the problems many Bitcoin investors currently face is that the cryptocurrency law is a fairly new law. This means that the majority of cryptocurrency-related laws are not yet properly laid out. So it’s easy to break the law at a point you don’t even know about.