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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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RoFX Review – Simplified Trading for Beginners

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RoFX Review
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Developed in 2009, RoFX was tested in the world currency market and started offering successful bids with excellent profits from 2010. It is an EA with a proven AI that provides a fully automatic trading solution. The robot is ideal for beginners who do not have much knowledge or experience in forex trading. Here is an honest review of RoFX based on the information gathered from myfxbook and top forex robot review tests.

How to Get Started with RoFX

You need to know that RoFX is not available for download. However, you can open an account for free on the robot’s official website rofx.net.  After logging in, the trader can choose from the packages available. A trader should select the package which seems to be the most convenient. 

The bigger the deposit, the less of a percentage is paid as performance fees. The trader also has the higher share in the daily trading profit. Daily profit is calculated as 0.38%. There is loss coverage guarantee.

The following packages are available:

  • Trial
  • Easy start
  • Moneymaker
  • Gold
  • VIP
  • VIP PAMM

You may view the details of the packages in the…

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Fear & Greed Index Suggests A Bull in the Bitcoin Market?

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cryptocurrency trading
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As indicated by Justin Kwo, an analyst director from Bexplus, Cryptocurrency trading is a game of nerves and it cannot withstand the emotional behavior. Traders keep on changing their minds with the sudden and strong market fluctuations. This behavior reflects their psychological instability and prevailing sentiment in a particular time zone. However, in the Bitcoin market, traders’ emotions will determine their trading behaviors, which, therefore, affects the future trend of Bitcoin. 

So, what is Fear and Greed Index?

Alternative.me has the most well-known and respected Bitcoin fear and greed index.

  • Extreme fear can be a sign that investors are too worried. That could be a buying opportunity.
  • When Investors are getting too greedy, that means the market is due for a correction.

To make it precise:

  • When the index drops below 20 it indicates extreme fear.
  • When the index rises above 60, it indicates extreme greed.

The result of Fear and Greed Index is calculated from the following aspects:

Volatility: the program marks wider fluctuations as a sign of fear

Market volume: if buying volumes increase significantly, the greed levels rise, too

Social media: the client monitors, gathers and counts posts on various hashtags, to see how many interactions they receive…

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Origin Protocol Launches Fundraiser to Help Find Vaccine for COVID-19

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Origin Protocol
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Origin Protocol is selling KN95 masks at cost and shipping them to anyone in the US within 3-5 days.  This is just one of the ways Origin is turning its rewards campaign into a fundraiser to support the Coalition for Epidemic Preparedness Innovations (CEPI) — a foundation that is working to accelerate the development of vaccines against COVID-19. CEPI first launched in 2017 with initial funding from the governments of Germany, Japan, Norway and the Bill & Melinda Gates Foundation. To combat the COVID-19 outbreak, CEPI has been moving with great urgency in coordination with the World Health Organization (WHO), who is leading the development of a coordinated international response. 

“At Origin, we admire the critical work that CEPI is doing for people during this outbreak, and are dedicated to support its mission in accelerating the development of vaccines against COVID-19. With successful development and equitable access of these vaccines, we can fight COVID-19 together,” said Max Unger, Head of Community at Origin Protocol.

Shop at ‘Stay at Home’ & Support a Charity

For every purchase made on Origin’s ‘Stay at Home’ shop, the company will donate 100% of the proceeds to CEPI. Powered by Dshop

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