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New Tax Guidance & Crypto – What You Need to Know

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The IRS has issued its first tax guidance for cryptocurrency since 2014, a five-year period in which the crypto industry has only gotten bigger and stronger.

It is also a period that has seen crypto tax reporting become a hot topic, especially in 2019, when the agency began its push to recoup unpaid crypto taxes. With this in mind, fresh guidance has been long overdue, to say the least. 

We’ve extracted some key points, which you can read here.

How does this affect your previous tax returns? 

According to industry experts: not in any particularly profound way in terms of what is taxable and what is not. The guidance merely reaffirms the IRS’ position on cryptocurrency taxation.

Most of the information is there to clarify the issues that needed clarifying, and taxpayers will no doubt know where to go in terms of tax reporting.

IRS solidifies its stance on hard forks and airdrops

One potentially sticky situation that could raise more questions than answers was addressed in the IRS’ revenue ruling. The IRS used two situations, positing that if a hard fork occurs, but one doesn’t receive fresh coins from the new chain, then they will not have received any income. However, if there is a hard fork followed by an airdrop, and one receives new coins, they will have received taxable income if they go on to sell, transfer or exchange them. 

People are disappointed with this scenario, especially as people can end up with “airdropped coins” they did not ask for.

As it stands, people have to understand which hard forks and airdrops saw them receive new coins – as this is now officially income that attracts tax.

IRS guidance empowers the tax collector

The crypto community has, for several years, called for more clarity from government regulators, with the IRS telling Congress in May that it would issue just this. It has, and a quick read reveals that much of the new materials relate to standard tax rules that also apply to crypto.

The guidance makes understanding tax reporting obligations easier for crypto holders, which is one of the most important topics for them right now. However, the guidance very transparently empowers the IRS to flex its tax body muscles as it looks to squeeze every penny it legally can from the crypto industry.

The tax collector has already stated, “We know you hold and transact with crypto, and we want you to pay taxes on these transactions.” That is what the guidance is aiming to achieve. It reinforces that view and will no doubt forcibly pull more taxpayers into the compliance mold, something many cryptocurrency holders have failed to do, or have still been hesitant to do, so far.

As per the IRS, and from records that are readily available, very few people have reported on their crypto gains over the years. If you consider the staggering number of crypto accounts on platforms like Coinbase, then it’s easy to see that it’s only going to get tough if people do not begin to comply with tax rules. This has also given rise to crypto tax software which helps investors generate their tax reports and stay compliant.

Clearer rules around crypto tax reporting

Cryptocurrency tax advisors point out that the clarity the guidance brings was sorely needed by the crypto industry. From this viewpoint, we can posit that the guidance will simplify the process and approach to tax reporting for the benefit of cryptocurrency holders. Taxpayers and tax professionals can now approach crypto taxes from a far more knowledgeable position. 

Up until it sent out letters specifically addressing the issue, the IRS appeared to be lagging in the area of enforcement. This meant people relied on the 2014 guidance that classified virtual currencies as property for federal tax purposes. However, crypto has grown and evolved rapidly, with new gray areas arising that the original guidance could not cover. This forced taxpayers to grapple with what was the right way to go about reporting their crypto taxes.

In one of its FAQs answers, the IRS reminds taxpayers that they must report all taxable transactions regardless of whether they receive Form W-2 or Form 1099

The IRS is saying, in a nutshell, “follow our advice and keep track of all your transactions.” According to the IRS, this is a requirement of the Internal Revenue Code.  But the truth is that the main goal is for users to correctly report on their income and gains and thus pay what they owe in taxes.

No need to complicate anything

One tax attorney has commented on the new guidance by stating that people who plan on remaining non-compliant should think extremely carefully about this decision. He explains that the rules are clear on how we report on other assets like stocks, and this is the same for crypto, and if one chooses to go another route, then that only succeeds in complicating matters for this individual.

Notably, the IRS reiterates its warning to potential tax cheats. If you are a taxpayer and you hold crypto but fail to report or pay taxes on your holdings, then the risk is very clear: hefty penalties, interests and criminal investigations. Remember, the IRS has information on more than 10,000 U.S. citizens that it sent letters to in July and August. So, be smart. 

And the teeny issue of crypto adoption?

If you buy a coffee using crypto, know that you need to report this when filing your returns. The IRS notes that crypto is held as a capital asset. This means that when you exchange your bitcoins for goods or other virtual currencies, you trigger a capital gain or loss.

There is no threshold on what should be taxable if you use crypto to buy goods or pay for services. You pay tax even on the tiniest of transactions. Could this affect the overall adoption of crypto? Let us know your thoughts in the comments below!

Robin Singh is the CEO of Koinly.io – a cryptocurrency tax solution that automates capital gains reporting for USA, Germany & Canada.

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Four deadly consequences using a low-end broker

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We all know trading is the best way to secure our financial freedom. Regardless of the economic crisis, traders can make a profit by executing orders in the Forex market. They execute the orders, traders use third party often known as Forex brokers. Unless you trade this market with a well-reputed Forex broker, it’s tough to ensure profit. You might get scammed in the investment industry. People are always thinking about their trading strategy and working more than 10 hours to learn the art of trading. They even forget the role of premium brokers. If you chose an unregulated broker, you are going to suffer a lot in the investment industry. Let’s learn to explore the consequences of choosing a low-end broker in the Forex market.

You might get scammed

If you trade this market with an unregulated broker, you might even get scammed. The traders are not aware of the fact, hundreds of false brokers are offering service only to get money from the investor’s pocket. Once you deposit money, you will be able to execute a trade without any problem. But things will take a turn when you request a withdrawal. They will show hundreds of causes and freeze your trading account. If you want to save yourself from such a broker, you must choose the broker who…

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Basic Guide on How to Spend Bitcoin and Other Cryptocurrencies

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In recent years, Bitcoin and other cryptocurrencies have entered more into the mainstream. Most people walking down the street have at least heard of Bitcoin. While a lot of people got involved in the buying and selling of cryptocurrencies to try and make a quick buck, most people who are enthusiastic about the world of blockchain are in it for the long haul. 

These are usually the people who are going to be more likely to actually use their Bitcoin and other cryptocurrencies as a payment tool and not just as a storage of wealth or a trading tool. This guide looks at a few different ways in which you can use your Bitcoin in spending capacity. 

Crypto Debit Cards

Perhaps the easiest way for you to spend your cryptocurrency is by linking up your holdings to a debit card. 

These days, many of the leading card providers such as MasterCard and Visa have these types of crypto-linking debit cards. These cards can be used just like you would a normal debit card that is linked to your fiat currency bank account. 

Naturally, the most popular type of crypto debit card is going to be for Bitcoin, but there are other cryptocurrencies catered for also. 

Prepaid Cards

There…

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Win a Zero Gravity Experience and €50,000 in BitStarz Space Level Up Adventure!

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In a galaxy far, far away, there was an online casino like no other. Giving players a chance to win epic trips around the galaxy, tons of cash, the latest tech and, of course, cozy space adventure gear. To kick off the new year, BitStarz Casino is proud to announce the launch of its latest rocket-fuelled promotion Space Level Up Adventure!

There is an incredible Zero Gravity experience in the heart of the good ol’ USA up for grabs, with €50,000 in individual prize pools, tons of super cool BitStarz merchandise, and even the latest MacBook Pro.

What are you waiting for? Read on to get the lowdown on how you can win all of this and much more!

Heading to the Edge of Space

When it comes to Space Level Up Adventure, the name of the game is, well, leveling up, with there being 40 fun-filled levels to go through. Each level presents a fresh challenge with new prizes to win, so keep on pushing if you want to win that Zero Gravity experience.

The first player to rocket to Level 40 will win tickets for two all the way to the United States. Once you’re in the US, you will be whisked away by a private chauffeur to your luxurious hotel to…

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