Science & Tech
Barely anyone is reporting their Bitcoin gains to the IRS
According to a recent study from Credit Karma Tax, a very small percentage of the people who own cryptocurrency are actually reporting it to the IRS.
Fewer than 100 of 250,000 federal tax returns prepared and filed so far this year through the company have reported cryptocurrency gains and losses, Credit Karma told CNBC on Tuesday.
“Generally, Americans with more complex tax situations file later in the tax season, especially if they expect that they’ll owe money. However, given the popularity of Bitcoin and cryptocurrencies in 2017, we’d expect more people to be reporting,” Credit Karma Tax General Manager Jagjit Chawla said in a statement.
According to the study, 52 percent of the company’s tax filers this year were millennials, and just 14 percent are 55 or over.
For anyone who has been interested in cryptocurrency for a while, the fact that people are surprised that no one is paying their taxes is strange, considering the fact that this has always been one of the primary advantages of cryptocurrency and one of the main reasons for its growing popularity.
Even crypto traders who actually intend on paying their taxes have no clue how to actually claim their earnings because the government has been vague about their policies, and they continue to make the record keeping more difficult, which is pushing many traders to avoid filing altogether.
Under new rules passed by the IRS this year some owners of cryptocurrency would be forced to pay up to 60% of their earnings.
For now, there isn’t much that the government can actually do about this, considering the fact that cryptocurrency is anonymous by its very nature. However, the government can seek out centralized exchanges as they have in the past with companies like Coinbase.
Earlier this year a court ordered Coinbase to give the government information on all of its customers who had over $20,000. It is highly likely that the government will continue to do this, but these companies are free to leave the US, and many of them are already based in countries that are more hands-off with cryptocurrency.
A survey from LendEDU and conducted by Pollfish taken in November suggested that less than half of those polled were not planning to report their cryptocurrency holdings to the IRS.
It will be interesting to see how things play out as IRS tax collectors are preparing to fight against a technology that they don’t understand and may be powerless to stop.
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