So I went to a tax attorney and got all the info about taxes.
I asked every question in the book.
Really the only loophole to not pay capital gains on every crypto transaction is becoming an ex pat.
This is not legal advice. Just Do your own research.
But here's some hypothetical situations.
No you can't 1031 exchange anything.
Any trade from one coin to another is taxed.
Any gain from a foreign exchange is taxed when sold.
You must keep track in an excel spreadsheet of every time you exchange coins and keep track of cost basis in USD.
Air drops are up to you. One way to do it is give the air drop a zero tax basis. When you sell it, claim the full value at the sale as capital gain.
Intentionally moving coins into privacy coins and trying to hide your holdings is illegal.
If you're paid in crypto then it's looked at as income tax.
The difference between fraud and a mistake is your record keeping.
If you report no crypto gains and have no records of it, but you made a million dollars. That is fraud.
The IRS will not contact you. Men in black masks will kick down your door, beat your ass, and take you to prison. You can slowly sort out all that you owe the government from there.
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So bottom line is just put in the work to go back and give a quality effort at documenting all your crypto transactions.
I know it sucks. I know you don't want to, but it is just how it is this year.
If you are a moral protester or you don't like paying thousands of dollars to the US so they can murder people with your money, then maybe you need to take steps to become an ex pat.
If you're like most people then you probably will just pay your taxes and shrug about the whole murdering thing.
Ahh who cares. We do a ton of good out there too. That's the way it is. Murder shmurder.
Anyway, have fun paying your taxes. See you on the other side.
...later in the day edit.
now poor people can learn how to pay 40% day trading tax because they finally found an angle to make money.
...and a little shill from me. Not really.
I just found a program I'm using to calculate my taxes this year.
It link API to all your exchanges and wallets and is supposed to pull all your transactions and calculate the cost basis for you.
We'll see how it works.
Here's a link:
https://cointracking.info?ref=T127683
I just signed up. I'm your referal if you use this link. Not sure what that means, but hopefully I get pay less taxes. haha
https://cointracking.info?ref=T127683
Lucky me living in a country that doesn't even know of crypto yet. Better enjoy it while it lasts.
Nice benefit. Congrats my friend.
Good post, it doesn't affect me since I live in 18th world country 😌 but I resteemed just in case some of my followers find it useful.
Thanks for the resteem. cheers. I hope crypto is good to you and your friends.
So basically the US has just given out enormous tax breaks to huge, shitty corporations and billionares, and are now trying to plug the hole with a crypto-tax and other burdens that impact largely the financial minority.
You see, when they say that it's a government "of the people, for the people", they dont' really specify which people. It's all about semantics.
That is an insightful way to put it. Yes, poor people are getting fucked.
Hahah, I've never laughed so much about having to pay taxes. I laughed because I know it's all true. And annoying. And true.
haha I know. This was like therapy for me.
I hate to have to calculate all this and pay, but the alternative is not hot. It feels good to just throw it out there. fun times. good luck this year
Thanks.. I'm not looking forward to paying for any of this.
My biggest disgust is that since Steem is "free", and crypto is "property" until you transfer it into another coin/token/fiat, there is a tax implication on Steem/SP/SBD also... =/
Good luck to you as well...
This is a good post, and it is the hard truth. Ignorance isnt an excuse
absolutely. that was actually the point of the IRS putting out a "notice".
That is your official notice that you can't claim ignorance.
wow this is actually a good post,
yeah well hopefully the exchanges let you print out your orders and transactions, until then i will be eating sandwiches, day trading while crumbs fall down to my shirt and im yelling at my cat for running across the keyboard while im trying to sell XRP.
haha yes. exactly. Don't spill those cheetos on your spreadsheet
Banksters
Thank you for this informative piece - as I'm pretty new to the investment/finance world, this piece really helped me understand the difference between capital gains tax and income tax. It kinda sucks that the 1031 loophole doesn't work anymore, but I was wondering if the IRS can actually track the amount of time we've held on to a particular asset and how much profit we've gained from it?
By the way, I also wrote a piece similar to this, which is about the taxes involved in cryptocurrency and I would really appreciate it if you can give it a read and provide me with some feedback! Thank you!
https://steemit.com/cryptocurrency/@stevensteel/how-much-profits-can-you-make-in-crypto-before-having-to-pay-taxes
P.S.: Loved the Men In Black reference!
The blockchain is inherently transparent. so yes they can track where you coins have moved.... IF they are tethered to you originally in some way. Most people bought on Coinbase or an exchange that verifies your identity. From there it's easy to see every place the coins move.
Now if you were to buy them from a tumbler or send them through privacy coins and shed the trail, that is a different story.
But then it becomes illegal if they prove you've intentionally tried to conceal your movements.
or maybe you only made a few grand and they will never take notice because they are so busy...
I've dealt with the government before. My main goal in all of life is to stay off their radar.
Ahh, I see. So would you say that if we made less than $10K in profits they will usually leave us alone?
Thank you for your post. They do no good out there, except police the world, drop bombs, kill innocent.