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Hardly Anyone Is Paying Taxes on Their Bitcoin Gains as Filing Deadline Nears
- Thread starter Megalith
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Gorankar
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I actually do. I am very careful to record internet purchases for my business. If I claim them as an expense, I pretty much have to make sure I claim them for sales tax purposes as well. The folks over at the Oklahoma Tax Commision do not have a sense of humor either.
Personal use stuff I buy online is already taxed these days at the vendors I tend to frequent. Amazon, Steam, SGAmmo, and a few others, already charge sales tax, so not much left to claim there anymore. I will admit that I did not start paying "use" taxes on online stuff until about 6-7 years ago when a friend's business went through an audit and he got rump raped over sales tax. I never really thought about it b4 that to be honest.
risc
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You twisted my words to mean THEFT, you didn't comprehend what I wrote, then you exhibited the exact problem.
You're so "pretty anti-tax" you just gotta make sure you tax, tax, everybody better pay your tax.
OK.... so personally I don't really care about crypto bucks one way or the other, except the video card shortage which is a totally different conversation. People paid real money for those cards, they didn't steal them... so, whatever.
So let's pretend for a second that I enjoyed.... uh I don't know, how about woodworking? If I paid real money for the TOOLS, and also paid SALES TAX on those tools, then those tools are mine, right?
If I then bought LUMBER, and paid SALES TAX on that lumber, then that wood is mine, right?
So after all that, if I then, on MY OWN TIME, modified said LUMBER, using said TOOLS, into .... I don't know... BIRDHOUSES? Those BIRDHOUSES are mine, right?
But what if I wanted to sell my BIRDHOUSES? I already paid tax on the TOOLS, the MATERIALS, and paid for the ELECTRICITY (which includes taxes) to make them.... would I have to now pay INCOME TAXES on the sales of my BIRDHOUSES?
That is QUADRUPLE taxation. On the tools, on the materials, on the electricity, and now have to pay taxes on my effort?
Am I crazy? Do I have this wrong? Because this all seems to me like the IRS can go screw themselves, they have already been paid THREE TIMES. Right?
So let's pretend for a second that I enjoyed.... uh I don't know, how about woodworking? If I paid real money for the TOOLS, and also paid SALES TAX on those tools, then those tools are mine, right?
If I then bought LUMBER, and paid SALES TAX on that lumber, then that wood is mine, right?
So after all that, if I then, on MY OWN TIME, modified said LUMBER, using said TOOLS, into .... I don't know... BIRDHOUSES? Those BIRDHOUSES are mine, right?
But what if I wanted to sell my BIRDHOUSES? I already paid tax on the TOOLS, the MATERIALS, and paid for the ELECTRICITY (which includes taxes) to make them.... would I have to now pay INCOME TAXES on the sales of my BIRDHOUSES?
That is QUADRUPLE taxation. On the tools, on the materials, on the electricity, and now have to pay taxes on my effort?
Am I crazy? Do I have this wrong? Because this all seems to me like the IRS can go screw themselves, they have already been paid THREE TIMES. Right?
Yes you pay income tax on your birdhouses, but you also get to deduct the cost of the tools (amortized out) and the cost of the lumber from your income tax. So you end up paying taxes on the difference, which is your profit and thus taxable.
Out of your example:
Sales tax on tools + lumber = state / local tax
Sales tax on electricity = state / local tax
Income tax on birdhouse sales = state + federal tax
In your scenario, the IRS is getting paid once.
+1
I see these stories way too often, and ask myself "Don't they have a backup?"
Shut down the infected machine(s), identify any network files that have been encrypted, and restore them from your backup.
I had one manager (who always seemed to get way to many viruses on his laptop) who got infected with one of these ransomware viruses.
He didn't call me, but I found out when someone else couldn't open a file on the network.
The virus had started encrypting one of the shared folders on a server.
I quickly figured out what machine was encrypting the files, and disconnected it from the network.
Luckily only one share folder had been affected, so I simply restored from backup. (I was taking snapshots every couple hours, so nothing was lost.)
Ended up copying off some of his data that wasn't encrypted and reformatting the laptop.
Spent way more time reloading the laptop than I did restoring the files on the server.
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Gorankar
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I pay my taxes, other people can pay theirs. I am not asking for special treatment. My posting history shows my feelings on taxes as a necessary evil and that I think our government overspends and that we are overtaxed as a result. Though I am not sure what that has to do with you not caring that people are commiting a crime because you believe it is better for our economy that they don't pay taxes.
I dunno, one could make the argument that this country was founded by tax cheats, so it's sorta the American tradition to find creative ways to not pay your taxes.
Before the war for independence, there were years and years of an underground economy designed to skirt paying taxes.
sfsuphysics
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Was going to say "good fucking god not another crypto thread..." but then "oh shit I need to mail my state taxes"... stupid fucking efile costs like $30! Seriously? WTF why does it cost anything?
risc
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Virtue signaling aside, someone keeping the capital gains from already taxed money that they risked isn't a crime.
How many times should the dollar you earned be taxed?
I don't want their money, why do you want it so bad?
risc
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daringx
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Not true. I pay my recommended share. My state (KS) has a "use tax" for online out-of-state purchases that don't collect state sales tax. They let you voluntarily report your tax amount, but also give recommendations based on your income level if you're not sure what you owe. I pay the the recommended taxes in most years if I'm not sure what I bought out of state. Otherwise I pay based on my actual out-of-state purchases which I have records. This year, I've only bought out-of-state from Amazon which charges KS sales tax so I'm not claiming any "use tax". They can audit me all they want...I'm following the rules they set forth.
As for Bitcoin, I'm paying a crapload of taxes on that. I sold some Bitcoin to buy a new car. I paid 8% state sales tax on new car. Then I also paid 15% long term federal tax on Bitcoin sale (it's a property sale, not capital gains as some posters have suggested), which includes the money I had to pay for state sales tax. So I pay Fed's taxes to cover state sales taxes on my sale of Bitcoin. Maybe I calculated it wrong? I not really sure and can't decipher the damned tax code and the cost to hire a professional would be more than I would "potentially" save if I played it safe..Perhaps it all washes out in the end, I just don't know.
I'm not ashamed or resentful, because I lucked out on my initial Bitcoin investment and got a free car just for waiting a couple years, but the Gov'nments got paid double due to current law and I had to sell extra BTC to pay for it. No cheater's here. I just wish I was smart enough to find and exploit the tax loopholes!
Airbrushkid
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What, Higher tax bracket. How? Let say poor fool only makes $15k a year. That is his tax bracket. Now no one knows he mines. Let's say he's been mining for about 3 years. Now he got lucky and his crypto jumped up in value. Now he is holding on a couple hundred grand. But no one knows he has it. It doesn't put him in a higher tax bracket unless he claims it.
Like it or not, as many times as your government decides.
Airbrushkid
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IcePickFreak
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They didn't print it so they can't have it!!! 
[21CW]killerofall
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The IRS didn't tell Credit Karma anything. Credit Karma also has a service that let's you do your taxes for free, which is where they got their data. But you must have not read the article as you would have known this if you read it. I love it when someone bashes the OP when they post an article without even bothering to read it. Of course the real question is how many people actually have Bitcoin and don't report it, which is not possible to know from their data.
D
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No, you pay taxes on Tuesday profits only. If your total bill of materials was $200 and you sold your bird houses for $300 then you made $100 and the government wants their cut of that $100 profit. Not quadruple taxation sorry.
D
Deleted member 93354
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Yes and the whiskey rebellion ended all that now didn't it?
D
Deleted member 93354
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Until we get ticked off enough to vote them out.
Most of us don't care enough to even know who their representatives are, let alone look up which spending bills their rep vote on.
May I see a show of hands please if you do?
<Crickets>
And this ladies and gentlemen is why 1 out of every 3 jobs is somehow tied to government funding.
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D
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And another one swims on the shallow end of the pool
B00nie
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If that makes you sad, they industrially kill male chicken using the same method. Gruesome stuff.Somehow, that makes me sad.
N4CR
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Paying tax = paying Rothschilds imf. Be good goyim!
Unfortunately, as history shows quite a lot, true free market economies, after huge growth, never fail to get their political systems distorted by the people who gained/inherited their fortunes. So, whoever gets voted in office, it is unlikely to change anything drastically in the current tax distribution (apart from widening the current gaps, that is)
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RanceJustice
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I don't have any problem with taxes on crypto profits, when they're turned intro fiat currency. I do have a problem trying to value crypto in and of itself, that has not been exchanged for fiat currency. In the former though, its just the same as income - or at least, investment/capital gains - so yeah, you need to handle it a certain way and that means reporting and paying taxes. Some people hate the idea of taxes on principle and I don't have any sympathy for that nonsense; just because you don't like how the money is spent 100% of the time doesn't mean you don't get to pay.
Of course, as far as I'm concerned though, the real issue here isn't the people who are just making a few bucks, but like elsewhere in finance/investment its those making hundreds of thousands, millions or more and attempting to weasel out of paying. This includes so called "tax avoidance" schemes that are lobbied loopholes big enough to drive dumptrucks of cash through and policies that are only viable to exploit if you range from relatively to obcenely wealthy (ie being able to not live paycheck to paycheck, so that most of you funds can go into tax-free offshore holdings companies or otherwise scrubbed clean for import etc) - lets clear them all out! Yes, Citgroup, JP Morgan, GoldmanSachs and many others should have the heads on chopping blocks first of all, but those who make tons of money on crypto - especially considering things like scamcoin ICOs that wouldn't be legal with other commodities etc... yeah, they need to pay their fucking taxes.
The nations with the highest human development and happiness index and lowest inequality typically have both taxes being collected with fewer loophole especially for the wealthy, while also spending that revenue on things to benefit the people of the nation as opposed to kowtowing and allowing the wealth of private entrenched interests to expand, damn everyone else . We should move that direction and someone who made a few thousand on bitcoin shouldn't have to worry about a serious tax burden, but those with the mining farms, so-called businesses that are propped up by the word "blockchain" and others who exploited a goldrush and made large amounts of USD et al shoul damn well not get a pass; rather, we should crack down on all the other industries that get away with not paying!
Of course, as far as I'm concerned though, the real issue here isn't the people who are just making a few bucks, but like elsewhere in finance/investment its those making hundreds of thousands, millions or more and attempting to weasel out of paying. This includes so called "tax avoidance" schemes that are lobbied loopholes big enough to drive dumptrucks of cash through and policies that are only viable to exploit if you range from relatively to obcenely wealthy (ie being able to not live paycheck to paycheck, so that most of you funds can go into tax-free offshore holdings companies or otherwise scrubbed clean for import etc) - lets clear them all out! Yes, Citgroup, JP Morgan, GoldmanSachs and many others should have the heads on chopping blocks first of all, but those who make tons of money on crypto - especially considering things like scamcoin ICOs that wouldn't be legal with other commodities etc... yeah, they need to pay their fucking taxes.
The nations with the highest human development and happiness index and lowest inequality typically have both taxes being collected with fewer loophole especially for the wealthy, while also spending that revenue on things to benefit the people of the nation as opposed to kowtowing and allowing the wealth of private entrenched interests to expand, damn everyone else . We should move that direction and someone who made a few thousand on bitcoin shouldn't have to worry about a serious tax burden, but those with the mining farms, so-called businesses that are propped up by the word "blockchain" and others who exploited a goldrush and made large amounts of USD et al shoul damn well not get a pass; rather, we should crack down on all the other industries that get away with not paying!
Nebell
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I don't live in the US.
In Sweden, we have a phone app which when connected to a bank allows you to send money instantly to anyone regardless of which bank they have, providing they use the same app.
I cashed on those $4000 during a 3 month period, small amount every couple of week.
People use that app very, very often when they sell things (you can use it for up to $15.000 per transaction). Banks here don't ask questions until suddenly there's over $15.000 on the account.
No one is going to ask about my tiny cash in.
"That money belongs to the people." - Bernie
Nobu
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It's pretty easy if you track all of your transactions and their details on a spreadsheet or use a broker who does it for you. Document purchase transaction date, cost, amount, and how many are still outstanding. On a separate spreadsheet, document sales date, proceeds, gains/losses (compare proceeds to purchase cost to determine this), long/short (long if more than a year, short otherwise). Every time you record a sale, update your purchase spreadsheet with the new outstanding amount. If you sell more than is still outstanding in one purchase transaction, then make another sale entry for whatever spills into the next transaction.
DukenukemX
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I am not sure what you are trying to say here...it seems vaguely anti-semitic.
Paying your taxes = paying for roads, bridges, airports, primary education, etc.
We have that here, its called paypal (or pick your own app...apple pay for some?). Though I believe the federal reporting for a cash transaction is 10k here...
This is one of those sounds great on paper things but not so much. This guy tends to gloss over a lot of things. Take the example of "the IRS already gets all that information". Well that ignores the fact that the third parties who provide that information, ignoring for a moment that not all income is on a 1099 or W2 and thus not all reported, would have to change their reporting structure and deadlines. Who will pay for those costs?
He also failed to mention that CA has a system called ReadyReturn that the last I heard was utilized by less than 5% of tax payers in CA. Implying nobody wants it.
But even if all of that were fixed...if the IRS fucks up YOU are still liable. You can look at their numbers and go "eh sure" and sign it...but if their math is wrong and you didnt check it you still get nailed for it. So you STILL have to do the taxes to verify their numbers.
Also are you willing to pay to make the IRS bigger? Implementing this will mean we have to plus them up...
maybe is different in the USA but don't you only pay taxes on EARNINGS? like actual profits? and until its converted to real money they dont want to acknowledge it as a real currency anyways, except when they can make a buck off its holders. until its cashed out i dont see how they can ask you to pay anything on it, and even then only part of that is profits after electricity/hardware costs...you want to tax crypto then be prepared to let people write off computer hardware and electricity as overhead.
Nobu
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For crypto earnings it's different. Iirc, they aren't treated the same as stocks for whatever reason. I haven't looked at it too hard since I don't mine anymore and own an insignificant amount, but it sounded pretty convoluted last I heard.
I thought they were property and thus not taxable until you realized the gains/losses.
Also I was gonna say they didn't have to be so convoluted but then I realized its government...so they they do have to be convoluted.
Nobu
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So, if you earn it as part of a job, must be reported on w-2. If held as a capital asset like stocks, then gains or losses on sales must be reported (or else ordinary gain loss on an exchange, whatever that means). If you mine it, it must be reported in your gross income at fair market value. Paraphrase from intuit.
Dead Parrot
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This isn't surprising. Unless the profits were from sales on a US based exchange, there probably isn't a 1099 or any kind of capitol gains report filed with the IRS. Now if some enterprising IRS agent looking for a promotion runs a report on folks who bank accounts suddenly grew by >= $10,000 without a matching taxable event, some folks may get a please explain why you don't owe taxes, penalty and interest letter.
Could also be a real mover for encryption back doors. For all of the squalling our Imperious Leaders make over law enforcement concerns on encryption, start threatening the cash flow and things will happen.
Could also be a real mover for encryption back doors. For all of the squalling our Imperious Leaders make over law enforcement concerns on encryption, start threatening the cash flow and things will happen.
SPARTAN VI
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Yeah, not happening. The IRS has made it virtually impossible for anyone significantly involved in cryptocurrency mining to declare this in their taxes. From the IRS website, they want miners to declare virtual currency that they mined at its value the moment it was earned/mined/paid out. Considering the payouts from pools are variable (e.g. amount threshold) and the wildly volatile rate of crypto... yeah, good luck attaching a value to crypto mined on any given week or day, much less any given hour or minute.
If you use magic to make property appear in your account, that's income. If the property becomes worth more later, you only pay on the gain when it's realized (which could be when you barter the property or sell it)