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Crypto is the first question on IRS Form 1040 in 2022 [pdf]
- artificialLimbs 4y agoAre there any laws in this space that would give the IRS authority to do anything about crypto earnings/losses?
- idontwantthis 4y agoYou owe the IRS taxes for everything, including profits from crime.
- deleted 4y ago[deleted]
- britneybitch 4y agoExisting tax code already covered crypto to a large extent. If you buy a boat for $100k and sell it for $150k, you've always had to pay taxes on the difference. Crypto works the same way.
- panarky 4y agoUnlike with digital assets, you don't have to tell the IRS you acquired a boat unless you sell it and owe tax.
- woodruffw 4y agoFor the purposes of taxation, cryptocurrencies are considered securities. You have to pay capital gains taxes on them (or, as appropriate, deduct your losses).
- yieldcrv 4y agocryptocurrencies are considered property not securities. The IRS has been very clear on this for nearly 10 years. I think you are conflating capital gains with securities, but there are in fact many asset classes besides securities.
- woodruffw 4y agoSorry, you're right[1]. I was confusing the IRS with the SEC. [1]: https://www.irs.gov/individuals/international-taxpayers/frequently-asked-questions-on-virtual-currency-transactions https://www.irs.gov/individuals/international-taxpayers/freq...
- a9h74j 4y agoAre actual traditional currency holdings still taxed in the US on unrealized gains and losses each year? The rules in question would seem to clarify that crytos are not mere currencies.
- yieldcrv 4y agodigital assets are not taxed on unrealized gains and losses, unless by realize you wish that meant “to dollars in my bank account”, asset to asset trades are taxed on their notional dollar amounts and nobody is conflating the currency aspect of crypto, that misnomer is so last decade. if someone starts a conversation with that word, I’m not going to correct them until a reply like yours tries to read too deep into it
- Finnucane 4y agoIf you bought or sold a thing for profit, or were paid in a thing, or won a thing in a contest, they can tax you on it. Even if it's illegal.
- pkilgore 4y agoWell, the definition of income in the USA includes [1]: > income means all income from whatever source derived Then it only proceeds to except certain things. So the better question, from the perspective of tax laws are: "are there any laws in this space that takes away the IRS's very clear authority to treat crypto earnings/losses like any other income" [1] https://www.law.cornell.edu/uscode/text/26/61 https://www.law.cornell.edu/uscode/text/26/61
- yieldcrv 4y agoyes, always were income is income capital gains is capital gains dividends are dividends the asset type that any of this was received in was never a factor, the nature of the transaction was the only factor its nice that the crypto space is maturing on this matter now
- alexcoomans 4y agoIt's a reword of the same question that has been there since 2020, see: https://www.irs.gov/pub/irs-prior/f1040--2020.pdf https://www.irs.gov/pub/irs-prior/f1040--2020.pdf https://www.irs.gov/pub/irs-prior/f1040--2021.pdf https://www.irs.gov/pub/irs-prior/f1040--2021.pdf
- BrianHenryIE 4y agoThe real info is in the instructions: https://www.irs.gov/instructions/i1040gi#en_US_2022_publink1000111717 https://www.irs.gov/instructions/i1040gi#en_US_2022_publink1... > For example, check “Yes” if at any time during 2022 you: * Received digital assets as payment for property or services provided; * Received digital assets as a result of a reward or award; * Received new digital assets as a result of mining, staking, and similar activities; * Received digital assets as a result of a hard fork; * Disposed of digital assets in exchange for property or services; * Disposed of a digital asset in exchange or trade for another digital asset; * Sold a digital asset; * Transferred digital assets for free (without receiving any consideration) as a bona fide gift; or * Otherwise disposed of any other financial interest in a digital asset. And points you to fill out Form 8949, Sales and other Dispositions of Capital Assets. https://www.irs.gov/forms-pubs/about-form-8949 https://www.irs.gov/forms-pubs/about-form-8949
- meltyness 4y ago> By October 13, 2011, agencies must: > Use plain language in any document that: is necessary for obtaining any federal government benefit or service or filing taxes Oh, well.
- taxman22 4y agoHow could they use more plain language?
- MBCook 4y agoSeems like plain language unless you count the terms the crypto world uses. And I think it would be far more confusing if the IRS decided to use different terms from everyone else.
- kcbanner 4y agoCan you explain what would satisfy your criteria?
- UI_at_80x24 4y ago>Received digital assets as a result of a reward or award; >Sold a digital asset; It seems to me that the "Steam Achievement" cards that you can sell/give away that you get for playing a game follows this line of thinking. My steam wallet now has $0.23 of value from the sale of these "digital assets".
- thmt 4y agoFor those who don't see the cryptocurrency question, it's section "Digital Assets": "At any time during 2022, did you: (a) receive (as a reward, award, or payment for property or services); or (b) sell, exchange, gift, or otherwise dispose of a digital asset (or a financial interest in a digital asset)? (See instructions.)" The IRS describes the term "digital assets" here: https://www.irs.gov/instructions/i1040gi#en_US_2022_publink1000111717 https://www.irs.gov/instructions/i1040gi#en_US_2022_publink1...
- cryotopippto 4y ago[flagged]
- yellow_lead 4y ago> I thought fishing expeditions are illegal? Where did you get this idea?
- deleted 4y ago[deleted]
- LastTrain 4y agoThat is sovereign citizen level logic. “I was told the IRS cannot touch my anarcho-capitalist currency”
- ghostwriter 4y agowhy "anarcho-" though, if the currency's based on total ordering of all conducted transactions? It's orderly-capitalist.
- woodruffw 4y ago> I thought fishing expeditions are illegal? I have no idea why you thought this: "fishing expeditions" are called "discovery" in US law, and they are both absolutely legal and a standard element of pre-trial preparation. (This has absolutely nothing to do with the IRS's statutory authority to tax your assets, and consequently their authority to ask you about them.)
- pkilgore 4y agoI think you're misunderstanding the limited protections of the fourth amendment with you voluntarily answering questions. Feel free to seek the advice of an attorney on taking the 5th on a tax form, but I suspect that will cause the IRS to do the necessary investigative work to obtain a warrant for your now extremely interesting tax return!
- 4y ago
- britneybitch 4y agoIn previous years, the question was worded "virtual currency". This year, it is worded as "digital asset". Looks like the question was broadened to include non-coin assets like NFTs.
- irrational 4y agoAm I going to have to report my Trump superhero trading cards?
- toomuchtodo 4y agoIf you made a profit selling them, yes. If you had a loss and don’t care to realize it, no. There is a service out there willing to buy NFTs for almost nothing to help folks realize losses if desired. A quick internet search should find it. Edit: found it https://twitter.com/coinledger/status/1599787141844054016 https://twitter.com/coinledger/status/1599787141844054016
- panarky 4y agoYou're required to check the box if you received a digital asset, even if you didn't sell it.
- kylecordes 4y agoNice them them to remind all the crypto people to deduct their 2022 losses!
- 2muchcoffeeman 4y agoIn AU you can only deduct capital losses against capital gains. What is the situation in the US?
- zerocrates 4y agoCapital losses directly offset capital gains, but if you have excess losses, you can deduct a relatively small amount of them from general income: a few thousand dollars. And if you have more than that limit you can carry them over to later tax years.
- adastra22 4y agoSame
- sbelskie 4y agoCapital losses can exceed capital gains up to $3k per year with some ability to carry over losses into subsequent years. There are also some particulars about the order of deducting long/short term losses against long/short term gains IIRC.
- monero-xmr 4y agoLosses on META bigger YoY than BTC and ETH
- cma 4y agoZuckerberg said in his presentation there would be a crypto/NFT element to his metaverse.
- taxman22 4y agoThis has been on for a few years, but is better worded now. I remember reporting “bitcoin” gains in 2012 when there was no guidance from the IRS so I was sure I was going to get audited. I did not.
- troymc 4y agoHere's the IRS definition of "digital assets": https://www.irs.gov/businesses/small-businesses-self-employed/digital-assets https://www.irs.gov/businesses/small-businesses-self-employe... "Digital assets are broadly defined as any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology as specified by the Secretary. "Digital assets include (but are not limited to): - Convertible virtual currency and cryptocurrency - Stablecoins - Non-fungible tokens (NFTs)" I would have thought that "digital assets" existed before there was any "cryptographically secured distributed ledger or any similar technology." For example, a record label might own the original recordings of a 1995 song as a set of files. Legally, they own the copyright in the recording, but the copyright alone isn't enough because the copyright loses its market value if the associated files get destroyed. In other words, the files are 1) digital and 2) assets, because if someone bought the recording, they would reasonably expect to get both the copyright and the files.
- woodruffw 4y agoThey're clearly using it as a term of art. All parties involved more than capable of understanding that "Digital assets" as defined (explicitly!) by the IRS do not necessarily encompass everything that might be plausibly described by the noun-adjective pair "digital asset."
- troymc 4y agoAgreed. It's no wonder there's a whole industry built around helping people understand the semantics of the tax forms. “You keep using that word. I do not think it means what you think it means.” -Inigo Montoya, The Princess Bride.
- woodruffw 4y agoYou're not wrong, but I really don't think the blame for this particular term of art can be hoisted on the IRS. As far as government definitions go, this one isn't too bad for what they have to work with[1]. [1]: https://www.irs.gov/instructions/i1040gi#en_US_2022_publink1000111717 https://www.irs.gov/instructions/i1040gi#en_US_2022_publink1...
- kiawe_fire 4y agoMaybe a dumb question, but how does or doesn’t this apply if you have played virtually any modern multiplayer video game in which you receive digital assets from loot boxes, or from buying cosmetics? “Digital asset” seems like a VERY broad term just looking for perjury. Not that the entire concept of how one files taxes in the US isn’t one big perjury trap already, it just seems less and less subtle about it with each iteration.
- deleted 4y ago[deleted]
- ocdtrekkie 4y agoThey appear to specifically have guidance indicating that this refers to cryptocurrency and NFTs. However, I would also point out, stuff you buy in a video game is never actually an asset: It's just an entry in that company's database that your account has an item. You never really control it in the way you theoretically control a crypto asset.
- mudrockbestgirl 4y agoThat argument doesn't make much sense. You don't control your bank balance, which are just IOUs, either. It's just an entry in some centralized company's database.
- jakelazaroff 4y agoThat’s not how bank account balances work. My balance is an entry in a database, sure, but it’s not “just” an entry. If a video game company decides my points are now worth half as much, or that they’ve expired, that’s their prerogative — and if I don’t like it that’s too bad. If a bank tried to do that, they’d get hit with a ton of lawsuits that they’d definitely lose.
- mudrockbestgirl 4y agoThat's only true in good economic times and non-war periods and places. What you're saying is true in America right now, but not in many other countries [0], and it's also not true across time. Even in America, eventually a time will come where you can't get your money out of a bank account exactly because it's just an entry in a centralized database and because it will be in the best interest of people in power to prevent you from doing so. This, and similar restrictions, have happened several times throughout history. The point I'm trying to make is that it's not fundamentally as different from an in-game currency as you think it is. The cycles just happen much less frequently over longer periods of time (companies go bankrupt and change faster than wars happens) so you may never see it in your lifetime if you're lucky. [0] https://www.timesofisrael.com/lebanese-cafe-owner-hailed-for-robbing-bank-to-get-his-own-money/ https://www.timesofisrael.com/lebanese-cafe-owner-hailed-for...
- ohCh6zos 4y agoDoes the NFT avatar reddit gave me against my will count?
- yieldcrv 4y agoyes airdrops have evolved based on the tax regime, but you did claim this one so I would make that a yes
- ohCh6zos 4y agoThat feels right, I guess I just check yes, and as long as I never sell it, it's not really an issue.
- cjbgkagh 4y agoI think it's quite likely that the government will come after the ability to defer capital gains. Avoiding taxable events is a heavily exploited 'loophole' by the very rich. In an effort to harmonize capital gains and income there will be some sort of mark-to-market wealth tax / property tax. So you may end up having to pay property tax on your NFT if you want to keep it. At least if it's valuable you can sell it to cover the tax incurred. The government doesn't have to value the property at sale price (see Chicago housing) so you could, however unlikely, end up owing more on taxes than you could sell it for - if this were to happen the government considers that more your problem than their problem.
- yieldcrv 4y agoI think that is unlikely because its not really about the state’s revenues, its about money circulating in the economy they simply penalize people that try to hoard dollars and not circulate, via tax and inflation so it doesnt matter to the government that rich people borrow against appreciated assets, if they spend the borrowing then vendors sell stuff and also pay tax on that. if they pay interest the bank gets that, usually. if they donate the loan proceeds or the assets thats fine too. if they invest it thats fine as well. obviously almost no individual politician perceives it this way, and a law may be passed through their house, but the aggregate outcome is that risk and money circulating is incentivized by not being taxed, accumulation of just cash to hoard is disincentivized by heavy taxes.
- samatman 4y agoI am once again asking you to read Lysander Spooner https://oll.libertyfund.org/title/spooner-no-treason-no-vi-the-constitution-of-no-authority-1870 https://oll.libertyfund.org/title/spooner-no-treason-no-vi-t... -3
- wmf 4y agoJust send out 1099s already!
- mcs5280 4y agoFocus on the little fish while the big fish continue to not pay
- ETH_start 4y agoI can see the anti-crypto types in glee over the tedium of having to record every Reddit community points transaction a user receives. "The oppressor no longer uses his own force directly upon his victim. No, our conscience has become too sensitive for that. There is still the tyrant and his victim, but between them is an intermediary which is The State—the Law itself. What could be better designed to silence our scruples and—more important—to overcome all resistance? Thus do all of us, by various claims and under one pretext or another, appeal to The State" - Frédéric Bastiat
- ShamelessC 4y agoITT: Blatant tax evasion!
- smsm42 4y agoInterestingly, this does not seem to apply to you if you just HODL and never sell. Also, it's not exactly clear if "fake bitcoin" that some companies offer - where you buy "something" that tracks, say, BTC but there's no real BTC behind it, you can not take custody of any BTC and the only thing you can do is to exchange it back for dollars - qualify as "digital assets". They are certainly not recorded on chain, for example.