Altcoins Talks - Cryptocurrency Forum
Learning & News => News related to Crypto => Articles about Cryptocurrency => Topic started by: PRIBO247 on December 24, 2018, 09:50:26 PM
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Taxes have been a hot topic in the cryptocurrency world this year.
Many countries have been trying to figure out how to tax crypto
assets, while traders have been figuring out how to lever them to
write off losses. As bitcoin and other cryptocurrencies enter the
mainstream, tax reduction strategies are starting to emerge.
Governments Belatedly Address Bitcoin Taxation
As cryptocurrencies have entered the collective conscious and
adoption has grown, governments have been trying to figure out
how to tax them. Most recently, the U.K. government released a
sprawling crypto tax advice document. Her Majesty’s Revenue and
Customs (HMRC) reveals in the document that individual investors
will be liable to pay capital gains tax each time they sell crypto
assets such as BTC for profit. HMRC ruled that investors would
not be allowed to classify their investment in cryptocurrency as
“gambling”, which is tax-free when it comes to winnings.
At the beginning of the year, U.K. Prime Minister Theresa May said
her government would be looking at bitcoin and cryptocurrencies
“very seriously” because of their potential to be “used by
criminals.”
Elsewhere in Europe, the European Union has been advised to
devise common cryptocurrency rules – and that includes tax.
While Switzerland has decided to do away with regulation, the
Swiss Federal Council has stated that it wants “the best possible
framework conditions so that Switzerland can establish itself and
evolve as a leading, innovative and sustainable location for fintech
and blockchain companies.” In Russia, while the government is
working out a regulatory framework, citizens are obliged to pay 13
percent tax on their crypto-related incomes.
This year in Asia, Korea said it is planning to tax cryptocurrencies
and initial coin offerings (ICOs), while proposals to lower taxes on
crypto in Japan were announced this month; currently the
government can take as much as 55 percent from cryptocurrency
transactions as miscellaneous income.
Taxation guidelines in the U.S. have generally been unclear. On
Dec. 21, lawmakers filed a bill to create tax exemptions for certain
cryptocurrency transactions. The state of Ohio also said it would
accept BTC from its citizens to pay taxes.
Meanwhile, South Africa’s government, generally considered to be
crypto-friendly, this year said income accrued from crypto
transactions must be declared – and said it would be cracking
down on tax-dodging cryptocurrency traders.
How Cryptocurrencies Can Help You Save on Taxes
While governments are figuring out how to tax cryptocurrencies,
there are actually ways in U.S. citizens can use them to their
advantage to pay less taxes. This is due to a 2014 notice by the
Internal Revenue Service (IRS) which treats cryptocurrencies as an
investment property, rather than a currency. Whenever you trade
cryptocurrency, the transaction is either a capital gain (where you
make money) or a capital loss (where you lose money). And any
losses this year could ultimately place you in a lower tax bracket.
The IRS allows taxpayers to deduct $3,000 in capital losses for
any given year from money earned from a day job. Losses beyond
that cannot be deducted until several years later.
As an example, let’s look at someone who bought $5,000 worth of
BTC this year. After turning that into $10,000 through trading, they
later lost cash due to a dip in the markets and took a big hit, losing
$8,000. They cashed out, walking away with just $2,000. They
would then be able to harvest a loss of $3,000 for the year which
would be deducted from their taxable income. If that person made
$50,000 in regular income, only $47,000 of it would be taxable.
In order to write off cryptocurrency losses as tax deductible in the
U.S., it’s essential to properly file, with exact dates, all
transactions incuding gains and losses. Certain online tools, such
as bitcoin.tax , can be useful in calculating capital gains and
losses. While 2018 has been a bad year for cryptocurrency
investors, the ability to write off thousands of dollars of bad trades
should provide some consolation.
https://news.bitcoin.com/