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2018 Encrypted Currency Correct Tax Guide

Despite the increasing exposure of cryptocurrencies, the laws that are relevant to them are still in the gray area of ​​most governments, especially when reporting digital currency revenue. The U.S. tax department, the Department of Revenue, released a provision 2014-21, which states that bitcoin and other competitive currencies are the objects of state income and personal income tax. So how do you manage your cryptocurrency and correctly declare taxes?


Let's begin with boring record topics. Yes, this also applies to cryptocurrency investors. If you are also considering tax issues, it is best to have some records. If you've ever tried the high-speed IRS "I lost my receipt," you will not want to have another second.

The IRD understands every excuse for you. This is not that they do not have a little empathy, you will find that no other way, the other with extra power to prove what is the simplest thing. On a regular basis, the Department of Internal Revenue will issue reminders to taxpayers informing taxpayers on how to preserve and protect your tax records.

Especially in some cases, such as natural disasters, this will make the traditional record management very tedious. The IRD advises people to make a backup safe deposit of their tax records elsewhere, which is also a good advice for cryptocurrency investors.

Sell ​​some assets?

If you do get a huge return on your investment, you probably should consider how you should pay taxes throughout the year. This is not to be considered too soon. In fact, by the end of the year, you can get things done in time. You may sell some cryptocurrencies, though you think the bull market will keep going.

The above decisions involve more than the fees. But at least it can be wise to consider it. For example, if your tax year already has a substantial capital loss included or is you having a huge loss of balance in your early years? In general, unused capital losses will absorb $ 3,000 in ordinary income.

But unless you have some capital gains to offset your $ 3000 capital loss, then that will be your fee income. Year after year, some people make their balances through unused capital losses. So, if you also have some unrecognized capital gains, you need to consider selling off some of the proceeds assets to absorb your losses, you can try this method to see how it works.

Lend through interest rates and hedges

Borrowing should not be regarded as a tax on both borrowers and borrowers, unless the loan is applied to interest payments. So, can you lend your encrypted currency to others? You can, but the question is whether this loan will be considered by the IRS as a borrowing money.

The jury still did not qualify the issue, and IDA believes cryptocurrency is a tax-obliged property. You do not want to borrow and pay (different cryptocurrencies?) Is treated as one tax. Some of this is based on your relevant documents, and to what extent it looks like a real loan.

Hedging cryptocurrencies is another hot topic to consider. Hedging can help investors avoid huge price fluctuations in the volatile cryptocurrency market. But please note that you are trying your best to avoid an arrangement you do not wish to achieve, meaning that it means buying and selling for tax purposes.


Holidays may soon pass, but it may be that every member of your family still likes to send some bitcoin and other cryptocurrencies. Their prices are now being reported daily, and there are quite a lot of news about encrypting monetary gifts and donations, but is this really a wise tax policy?

A philanthropic move should be the best way to divert cryptocurrencies. If you put a cryptocurrency you gave to a high quality charity you should be able to get a reduction in the tax revenue for the entire market value of the cryptocurrency market. If you buy a $ 500 cryptocurrency and donate it to charities when it costs $ 15,000, you get a $ 15,000 tax credit. Plus, you do not need to pay tax for the $ 14,500 gain.

Calling cryptocurrencies private organizations is not that easy. The same gift you gave your nephew would not have a corresponding reduction in taxes and fees. You also need to fill out a tax return when your gift exceeds $ 15,000. In 2018, $ 15,000 is called "year exclusion liability," meaning you can give this equivalent gift every year to any number of people without reporting.

Anything more than $ 15,000 will require a tax return, even though you may not need to pay any gift tax. You usually need some time to deal with gift taxes and property taxes. For 2018, the figure is climbing fast. From birth to death, the number of tax-free taxes you can transfer throughout this lifetime is $ 11.2 million, compared with $ 2.4 million for a couple.

1099 form

Finally, do not forget about the upcoming large number of IRS Form 1099. Typically, these uninteresting tax forms will be issued in late January, allowing you to report the previous year's income. The Department of Revenue said virtual currency wages paid to employees are also taxable and also need to be reported on Form W-2, one of the federal income tax detention and personal income tax items.

Similarly, the virtual currency paid to an independent contractor is also taxable, and payers who pay within the commercial domain also need to fill out Form 1099. Payments made in virtual currency need to be completed just like other property payments. This means that if a person pays an independent contractor more than $ 600 in virtual currency for commercial purposes to purchase his or her related services, he is required to fill in Form 1099. 
If you need to fill out the form 1099, like everyone else, you need to keep up. Everyone needs to report to the Internal Revenue Service and the state tax department. If you do not file an income tax return with the relevant agencies, the IRD will take corresponding measures.

This may seem puzzling, but you do not need to worry. The IRS is generally tolerant of those who need to fill in the tax form, even if an error occurs, but as long as it is not to avoid reporting.