Today, being the last day for filing taxes in the US, anxiety is running wild. For people who’ve invested in cryptocurrencies, this rush of blood is even higher. This is because the IRS is targeting people who have not reported their ‘crypto earnings’ for the taxes. According to a recent research, who surveyed over 2000 people, found out that over 57 percent of people have gained from the digital currencies in 2017. However in the month of February, another research pointed out that less than one in 250 people reported cryptocurrency gain or loss in their tax forms.
According to a recent study by TeamBlind, who surveyed over 2,600 people who said that they earned money from the cryptocurrencies in 2017 and “we asked them if they are reporting their earnings on their taxes this year. Nearly half said ‘No’. The survey ran from April 5, 2018 through April 12, 2018 and 46% responded with No.”
According to the Internal Revenue Service (IRS), anything bought using a digital currency is liable for a tax as capital gain. So if anyone who has taken out or paid for anything using Bitcoin or any of its likes may have to report to the IRS.
Another confusion that’s running rampant is that cryptocurrency brokers are not required to issue 1099 form disclosure. The 1099 form disclosure is the form used by the IRS to report income other than salaries/wages, bonuses and tips, on digital currencies while individuals are still responsible for reporting gains.
Over 8 percent Americans have invested in cryptocurrencies with IRS expecting over 156 million to file taxes this year. From past 4 years, the IRS has been providing information on taxation of cryptocurrencies, and it treats cryptocurrencies as properties and trade, sale and mining as taxable events.
Failing to report the taxes on cryptocurrencies would hold the same consequences as failing to pay taxes on investments. The regulatory authorities would come after you and one could face legal actions, like time in jail and a hefty fine of $250,000.
Source: Financial Express