5 Essential Questions About Crypto Taxes

Yahoo News! ^ | Fri, February 25, 2022 | Ben Borodach

[nickcarraway]

The real winners of the Super Bowl this year weren’t the Rams, who played a great game to win the title. They were cryptocurrencies, which in a few years have gone from nerd obsession to powerhouse advertiser buying airtime on the most watched television event of the year.

But crypto going mainstream has left an increasing number of investors puzzled about their tax obligations. As the April 15 tax deadline approaches, they will need answers more urgently.

Let’s start with the good news. Tax treatments have evolved from a one-size-fits-all approach to more nuanced guidelines for disposals, staking, hard-forks, payments and gifts, among other events relevant to crypto.

[SaxxonWoods]

No dividends to pay taxes on, I plan to hold mine all the way and leave it to my heirs, hopefully it won’t get taxed unless they change the tax law on inheritances.

[ponygirl]

I lost $6 on crypto last year. 🤷🏼‍♀️ Which I think is pretty good considering how volatile it has been.

[SaxxonWoods]

Amazing. I have small amount of Ethereum, it’s just for fun. If my heirs benefit, good.

[ponygirl]

I staked all my Etherium on ETH2 when it was at 5%. It has since dropped to 4.5%, but that’s still more than I would get in a savings account.

[aMorePerfectUnion]

PING!

If YOU would like to be on a CRYPTO PING LIST, please pm me.

The Crypto Ping List covers the following:

Bitcoin
Ethereum
Other coins built on the Ethereum blockchain mining
etc.

Thanks! For it - or ag'in it, it'll be a wild ride.

[Pollard]

I made about $300 and coinbase sent out an email saying they wouldn’t be sending anyone who made less than $600 a 1099.

[Hang'emAll]

I used https://cryptotrader.tax/ this year it worked seamlessly with coinbase.com and turbotax.com

Not part of any organization mentioned just giving my impressions.

[Ken H]

I suspect the govt still knows what you made.

[Drago]

Yeah Gemini isn’t sending out 1099’s under $600. either...you still technicaly need to report it in the Cap Gains category. ;-) And if doing “DeFi” stable coin staking (interest), that gets reported as “ordinary income” (same as interest on a savings account at the bank).

https://cryptotrader.tax/blog/defi-crypto-tax-guide

https://koinly.io/blog/defi-crypto-tax-usa/

[NonValueAdded]

Beware, there’s a perjury trap on Form 1040. You have to fess up to crypto. The IRS has John Doe subpoenas out to the exchanges and they will know if you traded. It’s not the amount that is at risk, it is the penalties for not reporting.

[Svartalfiar]

Yeah Gemini isn’t sending out 1099’s under $600. either...you still technicaly need to report it in the Cap Gains category. ;-)

If you sell it, no? As long as it's simply held/reinvested, you don't owe anything on gains until they're actually sold. Similar to stock trading. Right?

[Drago]

Yep, only if you sell it. (Like stocks, and technically gold...but most gold/silver people I know deal in cash and “forget” to report any sales “cap gains” they may have).

[Svartalfiar]

Yep, only if you sell it.

So how does that work if you don't sell it exactly, but use it directly for purchases? Do you then have to report all purchases? Or does that count as non-reportable income, the same way you don't calculate regular inflation/deflation as a gain or loss? Same as any other currency transfer, no?

[lwd]

You’re supposed to report any gains/losses from time of purchase until time spent (or sold). This is an almost impossible burden to retro-actively impose on taxpayers. I know people who have been buying 500/paycheck for at least 8 years now. There is no way to know the cost basis of the crypto your spending or selling since you can’t tell when it was purchased (without some sort of costly blockchain analysis and even then it could easily be obfuscated).