Cryptocurrency investors appear to be skirting their taxes. Whether keeping with crypto’s anti-establishment roots or for lack of ability, American cryptocurrency practitioners are testing the IRS’s tolerance for crypto tax evasion.
Tax day in the United States is tomorrow, April 17, 2018, but according to the popular tax filing service Credit Karma, few cryptocurrency holders have reported earnings or losses on their 2017 tax documents. Out of the company’s 250,000 new filings, under 100 have disclosed capital gains from cryptocurrency investments, figures that are in line with the company’s former reports [1]on cryptocurrency tax documentation.
Certainly, Credit Karma’s user base does not constitute the whole of America’s crypto investor populace. But it could reflect the demographic’s general resistance to paying taxes on their investments, and this could have something to do with the IRS’s policy.
In 2014, the IRS released an official notice[2] regarding its cryptocurrency tax policy. First and foremost, the IRS treats virtual currencies as property, subjecting them to the same capital gains taxes that affect traditional investments like stocks, bonds and real estate. These taxes are applicable to anyone who has received payment for goods and/or services in crypto (as part of a salary, for instance), as well as miners, who must account for gains as part of their income.
The tax code appears straightforward enough, but uncertainty remains. Given that the IRS treats any trade as a taxable event and the onus of reporting rests on the investor, reporting on cryptocurrency investments can seem confusing and convoluted to those untrained in accounting and finance.
“Even with the tax deadline rapidly approaching in the U.S., we’re still seeing lots of people unsure about the proper way to prepare cryptocurrency taxes. Properly accounting for crypto-to-crypto trades, trading on multiple exchanges, and purchases
