Connect with us

Featured news

New Tax Guidance & Crypto – What You Need to Know

Published

on

tax guidance
READ LATER - DOWNLOAD THIS POST AS PDF

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.

Featured news

Revealed: The Mental Skills Required to Be a Successful Trader

Published

on

successful trader
READ LATER - DOWNLOAD THIS POST AS PDF

The world of financial trading, be it investing in cryptocurrencies on the market or trading stocks, can be an unforgiving one. Only the very best are able to rise to the top and turn their trading regimen into a seven-figure income, meaning that total dedication to your craft is a prerequisite. Ask any successful trader, and they’ll tell you that having the right mindset is the key to success.

A clear mind with laser-sharp focus and serious endurance will be able to see the bigger picture, spot the most profitable trades, keep track of the market, reduce risk, and compete with the best of the Wall Street pros. In many ways, successful trading is a lot like being a successful poker player.

You need to be able to play the long game, make the most of your luck, and know exactly when to strike to become a high roller. All of these require a strong arsenal of mental skills. Here are the mental skills you need to build in order to become a successful trader.

Source: Pixabay 

Caption: Successful trading in the financial market requires mental strength, resilience, and endurance. 

Continue Reading

Featured news

Why is Crypto Futures Trading So Easy Today?

Published

on

READ LATER - DOWNLOAD THIS POST AS PDF

-One-on-one interview with CEO of BEX500

Bitcoin futures trading is the most efficient way to engage yourself in bitcoin market without having to acknowledge the ownership and storage responsibilities.

Some users say, crypto futures trading has never been easier with BEX500 exchange.

Can we trust BEX500 with our bitcoin? Today, we invited Anna Myshustina (Anna), CEO of BEX500 to dig more into that.

Q: hey, Anna, thank you for joining us. You were a successful trader in futures and options, what motivated your innovation in crypto industry?

Anna: My pleasure. I have been in derivatives for 8 years. As a trader, I found many crypto futures exchanges too complicated for beginners, but not efficient for the experienced.

So, we’d like to make a change. We are the first crypto exchange to introduce [ONE Account for Live & Demo]. You can login https://www.bex500.com and register for once and for all, and it will be for both live & demo trading.

While, traders in other competitors are still forced to login live and demo with 2 different accounts in 2 addresses for “live” and “testnet”.

Continue Reading

featured

Cryptocurrency, Online Gambling, and Regulation: One of the Three Can’t Stay

Published

on

online gambling
READ LATER - DOWNLOAD THIS POST AS PDF

To say that cryptocurrency is disrupting the world of technology and finance is an understatement. Ever since they arrived on the scene in 2009, they’ve been geared toward forever changing the fintech landscape for good.

One of the main reasons the technology proved to be so revolutionary was blockchain — the backbone of most cryptocurrencies. Blockchain is the digital ledger that provides full transparency and immutability of data, all the while eschewing any kind of third-party authority meddling. These attributes can lend themselves quite handily in a whole series of industries.

But increasing regulation of cryptocurrency may lead to it no longer proving useful to particular niches. One of these endangered industries is online gambling, which could suffer tremendously from heavily regulated cryptos.

How Cryptocurrency Helps Online Gambling

Online gambling happens to be one of many that would (and does) benefit from integrating cryptocurrency. Gambling happens to be illegal in many countries, and the people there cannot access online gambling either, even though it specifically remains unaddressed by most legislation. They had no channels with which to finance casinos they wish to play in, seeing that banks or other financial services don’t want to interfere when there’s a chance of legal repercussions.

But cryptocurrency enabled casinos to accept players that had no alternative with which to engage…

Continue Reading

Elite