San Francisco Run. USA Cryptocurrency Tax.
I love visiting the city. It is full of noise and movement, alive in its rush. Focus blazes by you, people blur into colors and expressions. Buildings of glass raise into the sky, kissing the clouds. Pungent smells shift quickly leaving you with faint impressions to muddied to translate. It is a stark contrast to my every day, a fun way to break up time.
This weeks topic was cryptocurrency taxes. Oh yay............
I was very interested in what this speaker had to say. It seemed no one really knew what was going on with taxes, and no one wanted to talk about it. I wanted to be informed about exactly what kind of extortion we were up against. It seemed like there were so many gray areas, a whole sky full.
Within five minutes of the talk it was apparent I was not going to like this at all.
The speaker, a tax lawyer, loved taxes and truly believed in the system. I was instantly annoyed, amplified by the tax rule explained and infused by parts of the constitution.
I was instantly cooled off when she said she knew coming here tonight that most people would hate her by the end of the talk. But she loves cryptocurrency and it's complex problem and wants to help people understand what the new laws are saying so they can make their own decisions. I may not have the same outlook as her but I now can listen and learn from her through a lense of respect.
Here it is through my understanding (proceed with grain of salt; newbies option)
I will skip over the technical law stuff, mostly because it is not my favorite subject, and get to the brass tacks.
Every single crypto transaction you do is taxable.
When you are trading between cryptocurrencies, taxed. When you trade altcoins, taxed. Every transaction is taxable and every dollar earned in as well. Pull it out before a year it is a significantly higher percent they take. I was planning on living off steem, but as it stands now I will have to do everything I can to limit what I pull out before August and I make a year on steemit.
It was also apparent that we have no laws protecting cryptocurrencies and every law they are enforcing is based off a very gray area with a lack of understanding.
The lawyer even said when dealing with the IRS and cryptocurrency it is up to you to educate the agents a process that is extremely frustrating, maddening process.
Solutions given?
Get cozy with excel spreadsheet and document everything you do with painstaking accuracy.
Because after that it is up to you to declare it the way you decided, which is confusing. But as long as you try to the extent of documenting everything you won't go to jail. You just might owe them some more money at some point.
Here's a good tool - Calculates Crypto Taxes Automatically
https://cointracking.info?ref=T127683
I'm using coin tracking. It is tedious, but I'm uploading info from each exchance I traded on and my hardware wallets. This program calculates the cost dollar basis and puts it in an excel spreadsheet.
Ahh yes this sucks. I don't like it. Help ease my tax pain and use the link above so I get some credit. Cheers my steem friends. Try to power through tax season. 2018 will be a great year.
Hey I was using that site a few weeks ago to estimate taxes. It does a really great job, organizes things, and calculates the first-in-first-out gains instantly. That's awesome.
Only issue I have is the price. The price they charge in bitcoin is super expensive. Starting to wonder if I could just enter in half of my transactions, print out the results, and then do the same thing with the rest of my transactions, since there is a 100 transaction limit on using it for free. It certainly is tedious, but it saves a lot of headache with calculating gains.
50% vote for you, and 50% for the author. You two are a valuable team.
I lost almost all my coins and tokens, so I have to claim a capital loss on my taxes. ;)
I believe a lot of people had this happen before the first of the year :) Thanks for reading.
Someone else was talking about transactions being taxable on crypto investment even if you don't bring them back into fiat; but, crypto is so volatile that I don't see how you can figure out whether you've made profit before it gets back into fiat. One transaction might net you a huge profit, but then reinvestment into something else could lose it all. So how can you pay tax on something you no longer have?
They need to simplify it, or maybe they want to make it complicated and scary in order to put people off.
Yeah it is like the wild west right now, I agree with you they should make it simpler. Thanks for reading :)
Wow!
So the speaker is saying that for every single crypto transaction is taxable.
I dont like this .
Thanks for sharing anyway.
I don't like it either, hopefully a lot of good changes will happen this year to make everything more fair and eaiser to understand. Thanks for reading.
Exchanges should make your transactions easily exportable to excel. It would surely make the data manipulation process a lot easier.
They made it sound like excel made is super simple. Simple process, lots of variables.
Well usually you have to calculate the weighted cost of each crypto you have bought and sold during the year. And calculate your adjusted cost base based off that. Just remember that all of your exchange fees are also included in your adjusted costs base. So you must also incorporate that into your adjusted cost base. To make it even more simple, you can just take all of your exchange fees and just reduce your total taxable capital gains by the total amount you spent on exchanges. There are a bunch of other items that are deductible as well. Once you set up all the formulas, it will be quite easy to do the math in subsequent years.
Great comment thank you.
:) thanks for the upvote
Now I'm wondering how it would pan out in our country.
It will be very interesting to see how each country approaches this. What country are you living in?
The Philippines @lifemovedbysteem.
Awesome! So many wonderful people here on steemit from The Philippines!
Yes, so many friends here in Steemit and future friends. Thanks for dropping by my blog @lifemovedbysteem.
What a load of BS! How can they prove I own crypto if I don't declare them?
Super BS. Coinbase and other exchanges submit all the information to the IRS at the end of the year. That is how they find out and with the blockchain being open it is pretty easily trackable when it is moved off the exhange.
Nice tip @happymoneyman, thanks.
@Ren, you wrote "limit what I pull out before August and I make a year on steemit" ..meaning steem held a year or more then sold is taxed as 'long term gain' not short?
Taxes..ugh :(
Exactly, long-term gain is a little better.
Yep, taxes ....ugh!
Ok thanks Ren. Hopefully the steem price is higher then too!
It'a going to be pretty bad. Most people think they can get away with not paying taxes and aren't going to pay. I would not want to risk losing all of the money I made. Taxes suck, but if you don't pay they can take everything.
Taxes do suck, but they know you have then and the blockchain is open and easily trackable. I think we should work on trying to educate and have fairer taxes for now. It is a lame situation.
thanks for sharing @lifemovedbysteem
Your welcome.