If You’ve Been Playing In Cryptocurrencies Playtime Is Over
For those of you who have been drawn into the cryptocurrency craze, it’s probably been a wild, wildly profitable and fun few years. You might have had some phenomenal gains and maybe some equally devastating losses, but the wild days are over. The law has caught up, the IRS has taken an interest and everything in the world of virtual currency is set to become regulated and taxed.
Playtime is over. The IRS wants what they consider to be their fair share.
No More Anonymity
An article at nulltx.com states it pretty succinctly, “The IRS is keeping close tabs on cryptocurrency users across the United States. A brand-new compliance campaign has been launched to ensure everyone files their taxes properly when it comes to Bitcoin and altcoins. This new development is not entirely surprising, as there are still plenty of speculators who do not report gains or losses to the tax agency.”
Young And Inexperienced Investors Suffer
The anonymity and tax-free years are soon to be nothing more than a memory. Of course, as always, the dabblers and small investors are the ones who are going to be hardest hit when the tax man comes a calling. Those with deep pockets don’t worry too much about anything. According to a recent New York Times article, “A lot of crypto investors are younger and don’t have a lot of experience trading stocks. When they find out they owe taxes on their cryptocurrency trades, a lot of people are kind of shocked.”
The confusion continues around where cryptocurrencies are held too. The IRS sees cryptocurrency exchanges not as currency for currency, but as property. Each transaction becomes a taxable event. And, where you hold your cryptocurrency used to make a difference — whether in a private wallet or held overseas. However, no matter where your currency is held, the IRS is now requiring disclosure.
World Leaders Unite To Combat Crimes Enabled By Cryptocurrencies
Maybe if cryptocurrencies hadn’t appealed so much to the criminally minded, the fun could have continued a little longer. But anything a criminal can latch onto for financial gain without leaving a footprint is too appealing. As a result, a recent article reported that, “Leaders of tax enforcement authorities from around the world have united to combat global financial crimes enabled by cryptocurrencies and other technologies. The group formed will be known as the Joint Chiefs of Global Tax Enforcement, or J5, and will comprise of participants from Australia, the U.S., Holland, Canada, and the U.K.”
This effort is exposing everyone who is dabbling in cryptocurrencies, not just the criminals. Point in fact, according to the NY Times article, “last November, after a yearlong lawsuit, the IRS won a judgment that forced Coinbase, the largest American-based cryptocurrency exchange, to turn over account records for more than 14,000 customers. In January, Coinbase sent 1099-K forms to a number of its current users, informing them that their trading proceeds were being reported to the I.R.S. and reminding them to pay the taxes they owed.”
Call If You’re Confused And Concerned
If you’ve been playing in cryptocurrencies and are concerned that you haven’t reported your involvement to the IRS, give us a call and we’ll do our best to help clear things up for you. The IRS is being lenient to those who report their cryptocurrency involvement voluntarily. But they won’t be lenient come next tax season.