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So if I made a whole $32 off of my experiment on Coinbase (invested $50 when the price was around $273.59/bitcoin and then sold when the price was around $459.6

by ulkesh 9y ago

So if I made a whole $32 off of my experiment on Coinbase (invested $50 when the price was around $273.59/bitcoin and then sold when the price was around $459.69/bitcoin), will the IRS really care about their cut? I honestly expected some kind of documentation from Coinbase with respect to taxes, such as a 1099-B. I never received such a document. I also read somewhere that the IRS is only coming after people who made $20,000 or more. (Note: I couldn't read this article due to the paywall) Should I be concerned that they'll try to get their $10 from me and then pile on a bunch of penalties?

cdoxsey 9y ago
Even if they don't send you a doc you need to pay taxes on your earnings.
- ulkesh 9y ago
  Of course, it's just what I expected since every other reputable investment business does this. However, my concern is less from that and more from the $30. Will they care?
  - rrdharan 9y ago
    It depends on your definition of “care”. As other comments have noted, you might get a letter. History suggests they would not be likely to attempt to prosecute you for tax evasion. https://www.hrblock.com/tax-center/irs/tax-responsibilities/prision-for-tax-evasion/ https://www.hrblock.com/tax-center/irs/tax-responsibilities/... They do have a limited budget for enforcement and they prioritize accordingly.
    - floatingatoll 9y ago
      The letters described are for correctable human mistakes that can be detected by math crosschecking and fixed by a letter. If they decide you are trying to avoid paying taxes on Bitcoin, and they decide to be upset about that, they would likely initiate an audit instead of a form letter — the serious, investigator, difficult kind.
alyandon 9y ago
The IRS once sent me a letter because I had slightly underpaid my taxes where they informed me of the amount I had underpaid and assessed a 10% penalty.... for a grand total of ~$8. They weren't jerks about it but they do seem to have a weird attention to detail for certain matters.
- CydeWeys 9y ago
  I've had something similar happen with MD state taxes. They know all your reported sources of income and know exactly what you've paid, and if the arithmetic doesn't add up, their software will come after you even for small amounts. In my case I had accidentally attributed a small amount in January quarterly estimated taxes to the wrong year.
- ulkesh 9y ago
  I'll be quite happy to pay them $11. :) Here's hoping that's all it would end up being.
- Terretta 9y ago
  For an individual, it’s a detail. At scale, real money. With 150 million tax payers, if they had a $10 cut off everyone underpaid, that’s a potential loss of $1.5 billion, over half of the annual national parks budget. Not so weird.
icelancer 9y ago
>> Should I be concerned that they'll try to get their $10 from me and then pile on a bunch of penalties? No, despite their reputation, the IRS is pretty reasonable about stuff like this, at least in my experience. They're relentless if they think you owe a ton or were malicious, but they don't intentionally trump up penalties on the every day person.
- GuB-42 9y ago
  I guess it makes sense. The IRS is profit-driven. The state wants to maximize the amount of money recovered minus how much it costs. It makes more sense to go after the targets they can get the most money from. They won't bother you with your $10, it is a waste of their time compared to the thousands they can recover on larger scale, well established fraud.
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- deleted 9y ago
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matwood 9y ago
Probably not a huge concern, but I look at it this way. Is it worth your future time to deal with over ~$10 in taxes? Is it something that can lead to triggering an audit? Even if the chance of the IRS coming back to me is small, I'd much rather pay the $10 now than deal with them later.
RealAnalysis 9y ago
what about $400 in gains?
JumpCrisscross 9y ago
> will the IRS really care about their cut? Just pay the damn tax. If you’re thinking “will the IRS care,” avoid the hassle and pay it. Forgetting $32 of gains is one thing. Wilfully determining the IRS won’t come after you is another.

by ulkesh 9y ago

cdoxsey 9y ago

Even if they don't send you a doc you need to pay taxes on your earnings.

ulkesh 9y ago
Of course, it's just what I expected since every other reputable investment business does this. However, my concern is less from that and more from the $30. Will they care?
- rrdharan 9y ago
  It depends on your definition of “care”. As other comments have noted, you might get a letter. History suggests they would not be likely to attempt to prosecute you for tax evasion. https://www.hrblock.com/tax-center/irs/tax-responsibilities/prision-for-tax-evasion/ https://www.hrblock.com/tax-center/irs/tax-responsibilities/... They do have a limited budget for enforcement and they prioritize accordingly.
  - floatingatoll 9y ago
    The letters described are for correctable human mistakes that can be detected by math crosschecking and fixed by a letter. If they decide you are trying to avoid paying taxes on Bitcoin, and they decide to be upset about that, they would likely initiate an audit instead of a form letter — the serious, investigator, difficult kind.

alyandon 9y ago

The IRS once sent me a letter because I had slightly underpaid my taxes where they informed me of the amount I had underpaid and assessed a 10% penalty.... for a grand total of ~$8. They weren't jerks about it but they do seem to have a weird attention to detail for certain matters.

CydeWeys 9y ago
I've had something similar happen with MD state taxes. They know all your reported sources of income and know exactly what you've paid, and if the arithmetic doesn't add up, their software will come after you even for small amounts. In my case I had accidentally attributed a small amount in January quarterly estimated taxes to the wrong year.
ulkesh 9y ago
I'll be quite happy to pay them $11. :) Here's hoping that's all it would end up being.
Terretta 9y ago
For an individual, it’s a detail. At scale, real money. With 150 million tax payers, if they had a $10 cut off everyone underpaid, that’s a potential loss of $1.5 billion, over half of the annual national parks budget. Not so weird.

icelancer 9y ago

>> Should I be concerned that they'll try to get their $10 from me and then pile on a bunch of penalties? No, despite their reputation, the IRS is pretty reasonable about stuff like this, at least in my experience. They're relentless if they think you owe a ton or were malicious, but they don't intentionally trump up penalties on the every day person.

GuB-42 9y ago
I guess it makes sense. The IRS is profit-driven. The state wants to maximize the amount of money recovered minus how much it costs. It makes more sense to go after the targets they can get the most money from. They won't bother you with your $10, it is a waste of their time compared to the thousands they can recover on larger scale, well established fraud.
- deleted 9y ago
  [deleted]
deleted 9y ago
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matwood 9y ago

Probably not a huge concern, but I look at it this way. Is it worth your future time to deal with over ~$10 in taxes? Is it something that can lead to triggering an audit? Even if the chance of the IRS coming back to me is small, I'd much rather pay the $10 now than deal with them later.

RealAnalysis 9y ago

what about $400 in gains?

JumpCrisscross 9y ago

> will the IRS really care about their cut? Just pay the damn tax. If you’re thinking “will the IRS care,” avoid the hassle and pay it. Forgetting $32 of gains is one thing. Wilfully determining the IRS won’t come after you is another.