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Thread: Bitcoin, the IRS and you

  1. #21
    @Gullible
    Just asking based on my prior post re stock market gains and losses. Can you actually write off your entire loss, if you sustain one, or is it capped? Believe me, there are so many changes to the tax code, that CPA’s have to do a huge amount of “continuing education,” every year. So I know what I said may have changed. The funniest part is most CPA’s use Turbo Tax or QuickBooks to create and file their client’s tax returns.

    If you are a salaried employee, and have less deductions than the standard deduction the gov gives you (I think it was $12,500 for a married couple last year) you really don’t need an accountant. But if you have itemized deductions, over the standard deduction, you are way better off using an experienced accountant. Also if you own your own business, or are otherwise self employed, the same goes. Just the major changes made in the last year are enough to use an accountant. Also, for everyone out there, anyone can call themselves an accountant, although tax preparer would be more honest. The distinction is if the person is a CPA, in which the exam they have to pass is harder than the Bar Exam. Plus they have to be current with all changes by taking classes every year. This is not a slam on any tax preparers out there, I have met plenty that know as much as any CPA. The only difference is the bill!

  2. #22
    Join Date
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    dtek has a brilliant futuredtek has a brilliant futuredtek has a brilliant futuredtek has a brilliant futuredtek has a brilliant futuredtek has a brilliant futuredtek has a brilliant futuredtek has a brilliant futuredtek has a brilliant futuredtek has a brilliant futuredtek has a brilliant futuredtek has a brilliant futuredtek has a brilliant futuredtek has a brilliant futuredtek has a brilliant futuredtek has a brilliant futuredtek has a brilliant futuredtek has a brilliant future

    Quote Originally Posted by M77 View Post
    @Gullible
    Just asking based on my prior post re stock market gains and losses. Can you actually write off your entire loss, if you sustain one, or is it capped? Believe me, there are so many changes to the tax code, that CPA’s have to do a huge amount of “continuing education,” every year. So I know what I said may have changed. The funniest part is most CPA’s use Turbo Tax or QuickBooks to create and file their client’s tax returns.

    If you are a salaried employee, and have less deductions than the standard deduction the gov gives you (I think it was $12,500 for a married couple last year) you really don’t need an accountant. But if you have itemized deductions, over the standard deduction, you are way better off using an experienced accountant. Also if you own your own business, or are otherwise self employed, the same goes. Just the major changes made in the last year are enough to use an accountant. Also, for everyone out there, anyone can call themselves an accountant, although tax preparer would be more honest. The distinction is if the person is a CPA, in which the exam they have to pass is harder than the Bar Exam. Plus they have to be current with all changes by taking classes every year. This is not a slam on any tax preparers out there, I have met plenty that know as much as any CPA. The only difference is the bill!
    Not to discourage other answers, but individual tax advice is probably beyond the scope of what anyone here can reasonably provide. You might find the answers you seek in this IRS Notice for individual taxpayers regarding virtual currencies:
    https://www.irs.gov/pub/irs-drop/n-14-21.pdf

    Other good sources of information are found at these links:
    https://www.investopedia.com/tech/ho...in-tax-filing/
    https://www.doughroller.net/taxes/bitcoin-tax-guide/
    https://www.magnifymoney.com/blog/in...bitcoin-taxes/
    https://www.cryptotrader.tax/blog/ho...rency-on-taxes
    Helpful M77, Gullible Rated helpful

  3. #23
    @dtek
    You are absolutely correct. In my earlier post, I actually specifically said that nobody should take any of what I say as accurate, as what I said earlier in the thread was old, and the tax codes change every year. @Gullible seemed to have a lot of experience with cryptocurrency, so I was curious if that one rule was still around. Obviously everyone should consult with a professional, unless they can file the ultra simple EZ Form.

    The thing I questioned was not something that would change for different people. It was, at least back in the 90’s, a rule for everyone. Capital gains were taxable, but capital losses were capped. I hope nobody took that as solid advice, as that was not my intent.

    - - - Updated - - -

    Thank you for the links, they have a wealth of knowledge in them.
    Likes dtek liked this post

  4. #24
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    Gullible has a reputation beyond reputeGullible has a reputation beyond reputeGullible has a reputation beyond reputeGullible has a reputation beyond reputeGullible has a reputation beyond reputeGullible has a reputation beyond reputeGullible has a reputation beyond reputeGullible has a reputation beyond reputeGullible has a reputation beyond reputeGullible has a reputation beyond reputeGullible has a reputation beyond reputeGullible has a reputation beyond reputeGullible has a reputation beyond reputeGullible has a reputation beyond reputeGullible has a reputation beyond reputeGullible has a reputation beyond reputeGullible has a reputation beyond reputeGullible has a reputation beyond reputeGullible has a reputation beyond reputeGullible has a reputation beyond repute
    Gullible has a reputation beyond reputeGullible has a reputation beyond reputeGullible has a reputation beyond repute
    It does not appear clear yet if it would fall under capital gains. Seems like it would

    - - - Updated - - -

    I haven't read all those publications, the answer may lie there

  5. #25
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    dtek has a brilliant futuredtek has a brilliant futuredtek has a brilliant futuredtek has a brilliant futuredtek has a brilliant futuredtek has a brilliant futuredtek has a brilliant futuredtek has a brilliant futuredtek has a brilliant futuredtek has a brilliant futuredtek has a brilliant futuredtek has a brilliant futuredtek has a brilliant futuredtek has a brilliant futuredtek has a brilliant futuredtek has a brilliant futuredtek has a brilliant futuredtek has a brilliant future

    The IRS must be listening in on our conversation. They issued new guidance this afternoon on tax treatment and reporting obligations for virtual currencies.

    It does appear that cryptocurrency profits and losses are taxed under the capital gains rules.

    https://www.irs.gov/newsroom/virtual...ng-obligations
    Last edited by dtek; 1 Week Ago at 11:05 PM.
    Helpful djrick Rated helpful

  6. #26
    Quote Originally Posted by MarySue155 View Post
    @dtek Thank you that article is really helpful. And apparently if you get Bitcoins from a hardfork exercise (is it me or does that sound like a crossfit thing?) it's treated as ordinary income. I don't even want to know what a hardfork exercise is.

    My understanding of Bitcoin is it is supposed to be out of the reach of government control, I don't think it's specifically about avoiding tax but it's supposed to be an alternative to fiat currency and it is a sort of non-government controlled virtual commodity money. It's an interesting concept to think a government would tax a anti-fiat currency which for me begs the question, why not just stick with the fiat-currency? If the government is controlling the information on the non-fiat currency and you have the volatility of the cryptocurrency to deal with as well, may as well stick with the fiat-currency? Right?

    MarySue
    at least 1 intended use of cryptos is/was to allow 3rd world nations an avenue to join an economy, produce goods/services and market them to a world client base. how that is/will/was to be rolled out i haven't really drilled down to but that was a stated intention.
    Likes MarySue155 liked this post

  7. @wildings I can see it would help people who make money move their money around without government controls, however governments would be trying to stop people using bitcoin as a capitol flight mechanism. I think I'm right in saying a few years ago the Bitcoin value suffered a huge downturn when the Chinese government somehow managed to stop Chinese business using the currency to move money out of the country. On the other hand, maybe a business could use Bitcoin as a way of getting around tariffs?? If I make widgets and sell them for bitcoins wouldn't that jump over all sorts of trade deals I may not like as a widget manufacturer?

    MarySue
    Helpful wildings Rated helpful

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