At the Bitcoin 2022 conference in Miami, billionaire entrepreneur Peter Thiel branded Warren Buffett a member of a “financial gerontocracy” that has hindered the cryptocurrency’s acceptance. He questions why Bitcoin, till now, hasn’t skyrocketed to $100,000 or $1 million.
Let’s find out more about this, the tax gaps in crypto, and whether you should take the help of a crypto tax expert.
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Peter Thiel on Cryptocurrency
Thiel slammed the financial giants for Bitcoin’s failure to hit $100,000, a popular benchmark among the asset’s die-hard believers.
He blamed Buffett, 91, whom he referred to as a “sociopathic grandpa,” along with Dimon, 66, the CEO of JPMorgan Chase & Co., and Larry Fink, 69, the CEO of BlackRock Inc. All three have expressed skepticism about Bitcoin and other digital currencies.
But in reality, it turns out that they’re not the only ones. When it comes to crypto, and specifically crypto taxes, people believe they know what they’re getting themselves into, but they almost never do.
Crypto Tax Ignorance
While the Internal Revenue Service released explicit guidelines in Notice 2014-21 in the year 2014 and revised them in 2019, the rapid development of new crypto goods and services has put the US government behind the curve. However, many cryptocurrency investors are still unaware of the current crypto tax rules.
Tax misunderstanding is a concern for both individuals and the government. When asked about a variety of scenarios in which cryptocurrency may be taxed, 97 percent of respondents got at least one response wrong.
Taxable Crypto Events
If you’re not sure if you need a crypto tax expert, here’s a quick review of all the 7 taxable crypto events in the U.S.:
- Exchanging one form of crypto for another
- Trading crypto for fiat
- Obtaining staking rewards
- Spending crypto
- Interest earned
- Receiving airdrops
- Producing mining revenue
Biden’s Infrastructure Bill 2021
The Internal Revenue Service crypto reporting requirements in 2023 will be simpler for bitcoin investors and tougher for crypto firms, as per Biden’s 2021 infrastructure bill.
Crypto exchanges, custodians, and other services must now comply with current broker information disclosure requirements, which means they must yearly submit Form 1099-B, which discloses all transactions.
In his latest budget plan, President Biden mentions crypto taxes as a strategy to close the budget gap, which suggests that clearer rules are on the horizon as the budget aims to update requirements for accounting for virtual currencies and assets.
Seeking Help from Crypto Tax Experts
We’re not just talking about CPAs. In the digital world with digital currencies, there are digital crypto tax experts (aka cryptocurrency tax tools) that’ll help you file your tax returns and give your complete insights about your crypto transactions and investments.
Various platforms such as ZenLedger will compile your entire crypto transaction history as it is integrated with hundreds of crypto exchanges, wallets, and blockchains, leaving you completely stress-free about dealing with crypto taxes.
The Bottom Line
Crypto tax advising and compliance are also expanding industries as crypto grows. Cryptocurrencies are expected to face waves of new regulation and legislation as the government seeks to figure out how digital assets integrate into the existing tax structure.
It’s thus a good idea to figure out what you’re responsible for right now before things change again.
FAQs
- How much tax do you pay with crypto?
A capital gain occurs when you sell a crypto asset for a higher price than when you bought it. The amount of capital gain tax you’ll pay is determined by how long you owned the asset before you sell it.
Long-term capital gains are earned on assets that are kept for more than a year before being sold. They are taxable at different rates: 0%, 15%, or 20%. A short-term capital gain occurs when an asset is sold after being held for a year or less. This might be taxed up to 37 percent.
- Do you pay taxes if you pay with crypto?
Bitcoin and other cryptocurrencies are classified as property by the Internal Revenue Services. So, when you sell or exchange them for a product, you must pay taxes on the increase in value, just as when you sell stock.
- Can taxes be avoided with crypto?
If you’re holding cryptocurrencies as an asset and don’t make any money, you won’t have to pay taxes on them until you dispose of them. You can dodge taxes entirely by not selling any within a given tax year.
- How do I keep track of crypto taxes?
There are digital crypto tax experts (aka cryptocurrency tax tools) that’ll help you file your tax returns, help you keep track of crypto taxes and give your complete insights about your crypto transactions and investments.
Various platforms such as ZenLedger will compile your entire crypto transaction history as it is integrated with hundreds of crypto exchanges, wallets, and blockchains, leaving you completely stress-free about dealing with crypto taxes.
Author bio: Sreejita is a content writer with 2+ years of experience in brands spanning genres, such as crypto taxes, pregnancy, real estate, and more. She speaks the audience’s lingo to curate SEO-friendly blogs, website content, product reviews, and guest posts and also optimizes content. When not typing away on the laptop, she listens to podcasts and scribbles in her art journal.
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