How to pay taxes on Bitcoin?

How to pay taxes on Bitcoin?

Members of the US Congress asked the US Internal Revenue Service how the United States should tax Bitcoin and other cryptocurrencies, which hinted at the unregulated level of cryptocurrency.

Taxation on Bitcoin was put on the agenda ten years after the birth of Bitcoin, and the IRS issued an announcement on how to tax digital products. A letter signed by 21 members of the US Congress on Monday said that the lack of guidance made it difficult for US taxpayers to understand the reporting requirements.

Tom Emmer, a member of the Minnesota congressman, said after signing the letter: "Taxpayers should clarify a few questions about the part of these emerging value transactions involving federal taxation." It is critical to correctly report these emerging assets."

However, the US Internal Revenue Service did not respond to requests for comment .

Currently, cryptocurrencies are considered property by the US government, which means that capital gains tax applies to every transaction, whether it is to buy a $1 million home or a $2 coffee.

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But there are still questions about how to determine the monetary value at a particular time and how to interpret events such as initial token products, where companies raise money by selling virtual currency to investors. In recent years, tens of thousands of initial token products have raised billions of dollars, making reports more complex.

“From a tax reporting perspective, tracking the gains and losses of each transaction can be complicated, but it gets more complicated year after year,” said San Francisco tax attorney Alex Kugelman, who advises clients on cryptocurrency taxes. “There is actually no guidance”

When referring to the IRS guidelines for digital currencies, a bitcoin is worth $496. In the following years, it set a record high of nearly $20,000 in December 2017 and a market value of $334 billion.

According to the letter, the remaining questions include how taxpayers should calculate the fair market value of price volatility, how to track exchange transactions, and how to consider currency in the blockchain, which is fundamental to Bitcoin and other cryptocurrency agreements. Variety.

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Despite the confusion, the US Internal Revenue Service says it is implementing more aggressive enforcement against taxpayers who misreport or underestimate the digital currency tax, according to the Token Center's April 2019 report, which focuses on the blockchain. A non-profit research center for technology. At a press conference in March 2018, the US Internal Revenue Service threatened to impose a maximum of five years in prison and a fine of $250,000 on those who were tax evaded for holding a digital currency.

Kugelman pointed out that the letter from Congress can be used as a form of protection to protect digital currency traders from auditing for tax reasons.

"This letter is very interesting," he said. “If any of my clients are audited, I will ask the auditor this question – how can the IRS take enforcement action against taxpayers if there is a clear lack of guidance?”

Members of Congress asked the US Internal Revenue Service to submit a written response outlining the latest guidelines for the release of virtual currency by May 15, 2019. (chain to finance)

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