Tax On Crypto: Are You Prepared?

Photo: Marco Verch / Flickr

Bitcoin has become a major buzzword in financial and investment circles in recent years, and with good reason too. Increasingly, people are trading in, or employees are being paid in cyber-currencies, of which bitcoin is the most famous, and of course this has caught the attention of tax authorities, most notably the IRS in the United States.

If you are dealing in virtual money, therefore, it is imperative that you understand the tax implications of these currencies.

As an Employer or Employee

If you are an employer making payments in virtual currencies, it is imperative that you declare these payments to the relevant tax authority. In the United States, the IRS requires all employers making payments in this way (in salary or bonus payments) on W-2 forms.

As bitcoin has a real-world equivalent value, you must state the amount that was paid (in US dollars) and the date of any transaction. This is very much in-line with classic payments, and so does not involve anything different. Similarly, if you are self-employed and are trading for goods and services in virtual currencies, you must also declare these earnings along with the dates of any transactions.

“From an employee perspective, you must also keep vigilant records, and you should also understand how taxes on virtual currencies work, as they are not the same as taxes on fiat currencies,” advises Martha Cartwright, an accountant at Writemyx and Nextcoursework.

Crypto as an Asset

Please be aware that bitcoin or any other virtual currency held as a capital asset is rated by tax authorities in the same way as property. In essence, that means that crypto is treated in the same way as any other bond or asset that someone holds as part of their capital portfolio.

Buying and selling virtual currencies, and making exchanges

The key element as in any tax calculation is to ensure that you keep a record. This begins when you covert any fiat money into virtual currencies, because this establishes the original value.

From here, keep detailed records of any transactions you make, whether that is buying or selling, and of course any exchanges back into fiat money. Most trading platforms allow for detailed records of these transactions, but ensure that you keep up-to-date with these, or you have a combined record if you are using multiple platforms.

Trading

Just like in non-virtual currency trading, you will have to declare any gains made from trading virtual currencies. There is a basic formula which you can use the calculate any capital gain or loss, which is as follows:

Fair market value – Cost basis = Capital Gain / Loss

This is an easy enough number to calculate, but will, of course, be complicated by multiple transactions across multiple platforms. Fair market value is what your currency was worth on the open market on the day of the transaction, while cost basis is the amount it cost you to make that transaction.

“If you do not have details of your transactions and the costs involved, most if not all platforms will allow you to access your historical records to calculate them. You may also be pleased to know that there is also crypto software out there which can assist you in this task,” says Terry Couzins, a project manager at Britstudent and Australia2write.

Report Your Losses to Save Money

If you have made capital losses on any of your trades, this is important as you can use these losses to offset the tax on your gains. In fact, you can offset losses made on crypto against gains made in other types of investments too, so having detailed records of these losses, as well as the gains, is really beneficial to you.

A lot of people do not think that declaring losses is necessary for a tax return because they have not made any money, so this is a detail that is often overlooked.

Mining

Virtual currency ‘miners’ be aware that tax authorities also regard any money made from this activity be included in any gross income earnings. To calculate the amount, you must use the fair market value of that currency on the day it was received.

Consult a crypto tax specialist. There now exist accountants specializing in crypto transactions, so if in any doubt, consult a professional.

Published at Sat, 13 Apr 2019 06:34:36 +0000

April 9, 2017

ISIS Attacks US-Led Base In Southern Syria, As Assad Said To Use White Phosphorus

zerohedge.com / by Tyler Durden / Apr 9, 2017 5:04 PM

With the US now engaged in military conflict with, and targeting Syrian army forces, what the Trump administration has (un)wittingly done is provide support to Islamic State, al-Qaeda, and al-Nusra and other terrorist forces, all of which have been engaging with the Assad regime in a fight in which the Syrian president has gradually seen the tide of war turn in his favor. At least until last Friday’s US cruise missile attack that is.

Which is why it should probably come as no surprise that, emboldened by US actions, moments ago the WSJ reported that Islamic State militants attacked a US-led coalition base (at least we now have official confirmation that there are US military bases in Syria) in southern Syria on Saturday, “triggering a fierce fight that required coalition airstrikes to repel, U.S. military officials said Sunday.”

The complex attack began on Saturday when Islamic State fighters detonated a vehicle bomb at a base in al-Tanf, a town in southern Syria along the Jordan border used by American special operation forces and Syrian rebels working with the U.S. coalition, the officials said.

Between 20 and 30 Islamic State fighters, including some with suicide vests, then attacked the base, which is a staging ground and training facility for the U.S.-backed Syrian rebels.

As the WSJ adds, Coalition forces and Syrian rebels engaged in firefights with the attackers and then called in airstrikes to repel the attack, officials said.