With the tax season’s end in the sight, it would be expected that majority of the people would have paid their taxes. However ‘tis not the case amongst the American households when it comes to crypto taxes. Out of the 250,000 filings, only 0.04% portion has only reported their crypto gains.
About 100 people have reported crypto gains out of 250,000 filings
The last date of tax filing in the US is April 17, 2018, which is just a few days away. However, reports suggest that Americans aren’t really feeling paying their crypto taxes as being just 3 days away from the end of tax season and only a small fraction of American residents have actually filed their cryptocurrency tax reports.
Recently, it has been reported that American households owe about $25 billion in crypto taxation. From the 250,000 filers on the Credit Karma Tax platform, less than 100 people have reported their crypto gains. This small fraction is about 0.04 percent of the actual tax filers.
Going by the numbers that $25 billion are owed in crypto taxation, looks like Americans are having problems with the tax authorities. According to the IRS, cryptocurrencies are considered property and are subject to capital gain tax meaning the holders need to report their profits and losses on them.
According to Jagjit Chawla, the general manager of Credit Karma:
“There’s a good chance that the perceived complexities of reporting cryptocurrency gains are pushing filers to wait until the very last minute”.
With people extremely cautious about dealing with IRS, he further explains:
“I want to reassure people that it’s not as complex as it may seem at first glance and that Credit Karma Tax has a number of resources about how to approach bitcoin and taxes.”advertisement
Apparently, crypto taxes policies are confusing people
IRS is already paying close attention to the cryptocurrency investors which became clear when the agency asked Coinbase the records of its users. Actually, IRS was mainly interested in the people with more than $20,000 in a transaction from the previous years.
Looks like, crypto taxation is making people nervous. Well, unclarity isn’t anything new but with cryptocurrencies becoming mainstream, there are far more confused crypto users and a lot more money on the line.
First of all, IRS considered cryptos properties and you are subject to capital gain taxes. You don’t’ need to pay any taxes if you are only buying or simply holding them. However, if you have used your digital currencies to buy something after it has been increased in value, you have to pay tax on them.
Though people are trying to avoid paying taxes on their crypto-for-crypto trades, the provision in the tax law says people have to pay taxes on them. Hard Fork is another section that confuses people. It is basically an event where a blockchain network splits and a new currency is formed on which IRS doesn’t provide any guidance.
There is certainly a lack of clarity here but it’s better to be safe than sorry. You might end up overpaying what you actually owe but it is definitely a better proposition than to take a chance that could result in an audit and further penalties.
Have you paid your crypto taxes? Let us know your response in the comment section below!