6 ms·

Does anyone pay taxes on crypto?

by eruci 8y ago

gruez 8y ago
legal answer: yes pragmatic answer: only if you interacted enough with the US financial system that the IRS might catch you.
seibelj 8y ago
Yes, it is quite easy to pay taxes on crypto and quite difficult to explain during audit how cash ended up in your bank account without associated tax payments. Pay your taxes!
- jniedrauer 8y ago
  > Yes, it is quite easy to pay taxes on crypto I only ever played with small amounts for fun, and in the long term, I took losses. But it's very difficult for me to compile all my trades for tax reasons. I set up automated trading on half a dozen different exchanges (some of which no longer exist) using half-baked python scripts with no logs. How on earth do I compile a Form 8453 showing all of those thousands of trades? I could spend months tracking down all the public keys I used and use blockchain explorers to compile a list of transactions... but I would not describe this as easy
  - ceejayoz 8y ago
    > How on earth do I compile a Form 8453 showing all of those thousands of trades? By planning to do so from the beginning. "I forgot to keep records" isn't going to be something the IRS really cares to hear.
    - jniedrauer 8y ago
      Yes, hindsight is 20/20. In my case, I doubt they'll care, given the small amount and the fact that there were no taxable profits. But I have to imagine that I'm not the only one who did this.
  - seibelj 8y ago
    I'm sorry you decided to conduct algorithmic trading of digital assets on multiple exchanges without ever considering taxes. But services such as those linked by the OP (and others like bitcoin.tax) automatically import trades from all major exchanges and calculate the most advantageous method to minimize taxes.
    - Buge 8y ago
      I was doing various cryptocurrency mining in 2011 and trading in 2012, long before bitcoin.tax existed. Many of the exchanges I used have since shut down.
  - xur17 8y ago
    I agree with this. Normal trading on exchanges might be relatively easy since you can just export transactions and dump them into a tool like this, but it can get a lot more complicated than that. Some examples of things that are complicated: - Trading ERC721 tokens (there are no tools to track down these transactions, track cost basis, etc - I ended up spending days hand crafting scripts to retrieve this data) - Opening a cdp on something like Makerdao (which parts of this are taxable events / how do I file it?) - What counts as a wash sale? [0] - What are allowable methods of tracking cost basis? - How do I handle hard forks? Some of these are partially answered, but none of it is clear at all. [0] https://help.cointracker.io/taxes/us-taxes/do-wash-sales-apply-to-cryptocurrency https://help.cointracker.io/taxes/us-taxes/do-wash-sales-app...
  - scottlocklin 8y ago
    > How on earth do I compile a Form 8453 showing all of those thousands of trades? Just use bitcoin.tax to keep track of it like everyone else does. Or presumably OP's new tool.
jmharvey 8y ago
Yes. I pay my taxes, and I suspect many other people do, too. Tax compliance in the US is generally pretty high. I also don't steal books from the library, even though I'm pretty sure I could get away with it.
- hopler 8y ago
  Tax compliance is high when counterparty (employer or broker) reports income. Tax compliance on cash transactions is lower. I don't think stealing books from library at any kind of scale approaching the value of tax evasion is so easy to get away with.
  - mehrdadn 8y ago
    > I don't think stealing books from library at any kind of scale approaching the value of tax evasion is so easy to get away with. I think you missed what the comment was trying to say.
  - joecool1029 8y ago
    > I don't think stealing books from library at any kind of scale approaching the value of tax evasion is so easy to get away with. Sort of offtopic but ontopic to your comment: When bored and reading state statutes I've discovered librarians in NJ are the only group of people aside from law enforcement officers that are relieved of most liability when arresting someone. (anyone else that does a wrongful arrest can be hit with all sorts of charges and civil lawsuits) Since then I've been raising awareness among the librarians of their ability to beat the shit out of people stealing books. So yes, you are correct. I would expect that it would be more difficult to get away with at scale in the same sense it wouldn't be wise to steal office supplies from the local police station.
    - yownie 8y ago
      sources needed please.
      - 7y ago
bonestamp2 8y ago
Yes. I've used bitcoin.tax the past few years. This one looks nice although it's missing a couple exchanges that I would need to use it next year (maybe they'll have them by then).
- wiidude32 8y ago
  What exchanges would you like to see added? Constantly working on new additions.
  - bonestamp2 8y ago
    HitBTC and COSS
    - milesalex 8y ago
      Tokentax.co has these out of the box
      - bonestamp2 8y ago
        Thanks!
caprese 8y ago
yes, the IRS concluded that "less than 800 people pay taxes on crypto" using a flawed and simplistic search string. I looked at how I reported various gains filed in 2014 and 2015 and it would not have included me in those 800 people. the best thing about bubbles getting larger is that more people with more personalities and expertise are aware of what these things are. A judge wouldn't rubber stamp a subpoena on such basic and flawed logic, a treasury secretary wouldn't trust their employee with as shoddy an analysis, influential senators wouldn't believe it as their own altcoin trades wouldn't be counted. speculation drives innovation.
tom_ 8y ago
Yes. Since we've just had our Happy New Tax Year, other UK readers might be interested in this Reddit thread, if only because of the tax-related links: https://www.reddit.com/r/BitcoinUK/comments/ba8d89/tax_thread_2/ https://www.reddit.com/r/BitcoinUK/comments/ba8d89/tax_threa...
matz1 8y ago
I don't do crypto, if I do I wouldn't. Just like I would not for cash transaction. I know legally I should and there is some risk but the risk is low enough.

Does anyone pay taxes on crypto?

by eruci 8y ago

Does anyone pay taxes on crypto?

legal answer: yes pragmatic answer: only if you interacted enough with the US financial system that the IRS might catch you.

seibelj 8y ago

Yes, it is quite easy to pay taxes on crypto and quite difficult to explain during audit how cash ended up in your bank account without associated tax payments. Pay your taxes!

jniedrauer 8y ago
> Yes, it is quite easy to pay taxes on crypto I only ever played with small amounts for fun, and in the long term, I took losses. But it's very difficult for me to compile all my trades for tax reasons. I set up automated trading on half a dozen different exchanges (some of which no longer exist) using half-baked python scripts with no logs. How on earth do I compile a Form 8453 showing all of those thousands of trades? I could spend months tracking down all the public keys I used and use blockchain explorers to compile a list of transactions... but I would not describe this as easy
- ceejayoz 8y ago
  > How on earth do I compile a Form 8453 showing all of those thousands of trades? By planning to do so from the beginning. "I forgot to keep records" isn't going to be something the IRS really cares to hear.
  - jniedrauer 8y ago
    Yes, hindsight is 20/20. In my case, I doubt they'll care, given the small amount and the fact that there were no taxable profits. But I have to imagine that I'm not the only one who did this.
- seibelj 8y ago
  I'm sorry you decided to conduct algorithmic trading of digital assets on multiple exchanges without ever considering taxes. But services such as those linked by the OP (and others like bitcoin.tax) automatically import trades from all major exchanges and calculate the most advantageous method to minimize taxes.
  - Buge 8y ago
    I was doing various cryptocurrency mining in 2011 and trading in 2012, long before bitcoin.tax existed. Many of the exchanges I used have since shut down.
- xur17 8y ago
  I agree with this. Normal trading on exchanges might be relatively easy since you can just export transactions and dump them into a tool like this, but it can get a lot more complicated than that. Some examples of things that are complicated: - Trading ERC721 tokens (there are no tools to track down these transactions, track cost basis, etc - I ended up spending days hand crafting scripts to retrieve this data) - Opening a cdp on something like Makerdao (which parts of this are taxable events / how do I file it?) - What counts as a wash sale? [0] - What are allowable methods of tracking cost basis? - How do I handle hard forks? Some of these are partially answered, but none of it is clear at all. [0] https://help.cointracker.io/taxes/us-taxes/do-wash-sales-apply-to-cryptocurrency https://help.cointracker.io/taxes/us-taxes/do-wash-sales-app...
- scottlocklin 8y ago
  > How on earth do I compile a Form 8453 showing all of those thousands of trades? Just use bitcoin.tax to keep track of it like everyone else does. Or presumably OP's new tool.

jmharvey 8y ago

Yes. I pay my taxes, and I suspect many other people do, too. Tax compliance in the US is generally pretty high. I also don't steal books from the library, even though I'm pretty sure I could get away with it.

hopler 8y ago
Tax compliance is high when counterparty (employer or broker) reports income. Tax compliance on cash transactions is lower. I don't think stealing books from library at any kind of scale approaching the value of tax evasion is so easy to get away with.
- mehrdadn 8y ago
  > I don't think stealing books from library at any kind of scale approaching the value of tax evasion is so easy to get away with. I think you missed what the comment was trying to say.
- joecool1029 8y ago
  > I don't think stealing books from library at any kind of scale approaching the value of tax evasion is so easy to get away with. Sort of offtopic but ontopic to your comment: When bored and reading state statutes I've discovered librarians in NJ are the only group of people aside from law enforcement officers that are relieved of most liability when arresting someone. (anyone else that does a wrongful arrest can be hit with all sorts of charges and civil lawsuits) Since then I've been raising awareness among the librarians of their ability to beat the shit out of people stealing books. So yes, you are correct. I would expect that it would be more difficult to get away with at scale in the same sense it wouldn't be wise to steal office supplies from the local police station.
  - yownie 8y ago
    sources needed please.
    - 7y ago

bonestamp2 8y ago

Yes. I've used bitcoin.tax the past few years. This one looks nice although it's missing a couple exchanges that I would need to use it next year (maybe they'll have them by then).

wiidude32 8y ago
What exchanges would you like to see added? Constantly working on new additions.
- bonestamp2 8y ago
  HitBTC and COSS
  - milesalex 8y ago
    Tokentax.co has these out of the box
    - bonestamp2 8y ago
      Thanks!

caprese 8y ago

yes, the IRS concluded that "less than 800 people pay taxes on crypto" using a flawed and simplistic search string. I looked at how I reported various gains filed in 2014 and 2015 and it would not have included me in those 800 people. the best thing about bubbles getting larger is that more people with more personalities and expertise are aware of what these things are. A judge wouldn't rubber stamp a subpoena on such basic and flawed logic, a treasury secretary wouldn't trust their employee with as shoddy an analysis, influential senators wouldn't believe it as their own altcoin trades wouldn't be counted. speculation drives innovation.

tom_ 8y ago

Yes. Since we've just had our Happy New Tax Year, other UK readers might be interested in this Reddit thread, if only because of the tax-related links: https://www.reddit.com/r/BitcoinUK/comments/ba8d89/tax_thread_2/ https://www.reddit.com/r/BitcoinUK/comments/ba8d89/tax_threa...

matz1 8y ago

I don't do crypto, if I do I wouldn't. Just like I would not for cash transaction. I know legally I should and there is some risk but the risk is low enough.