Bitcoin & Crypto Taxes In US: When to Sell and When to Hodl

Bitcoin & Crypto Taxes In US: When to Sell and When to Hodl

With 2021 in sight, bitcoin (BTC) and other crypto investors in the US are facing a fork in the road. They can cash in on the gains that 2020 has delivered and take profits off the table or continue to hodl until the new year or longer. Whichever way they decide to go will determine when and how much they will have to fork over to Uncle Sam come tax day.

Sharon Yip, certified public accountant (CPA), a crypto tax advisor working closely with crypto tax software company CoinTracking, spoke to Cryptonews.com about the tax dynamics for crypto investors. Yip, whose practice is dedicated to helping cryptoasset investors and blockchain companies dealing with crypto taxes, explained how in 2018, many people weren’t prepared to pay crypto-related taxes.

Many investors lost money as their portfolios tumbled in value. And when tax time came around, she said, they didn’t have the money to cover the bill. So they either intentionally avoided reporting their crypto transactions or simply didn’t know how to.

Now many of those investors are in hot water after receiving notices from the US Internal Revenue Service (IRS) related to 2018. This effort came as a result of US crypto exchanges like Coinbase issuing 1099-K forms to certain customers, which allowed the tax agency to match the forms with individuals who didn’t report their taxes. Investors whose crypto payments exceed USD 20,000 or who have completed more than 200 transactions are the recipients of a 1099-K.

“This is very serious. Based on the people who received the tax notice and contacted us for help, we’ve seen a range of tax assessments go from USD 45,000 to USD 1.5m based on sales proceeds once you throw in penalties and interest,” said Yip, adding that every single time you trade, it adds up. “It’s like a snowball that keeps rolling bigger.”

The IRS classifies cryptoassets as property. Yip’s advice to investors who are looking to capture a profit in this bull market is to have a clear idea about gains and losses and not to make assumptions. CoinTracking advises clients to make tax projections to gauge how much they might owe. Even if you have a full-time job with a W2 and just trade on the side, it might not be enough to cover taxes for capital gains. As a result, you could end up with a large balance due, which could trigger penalties for underpayment.

First and foremost, Yip explained, investors should know that every crypto transaction is a taxable event. The only time it’s not taxable is if you purchase crypto with fiat money, which is akin to buying stock. But if you are buying one crypto with another crypto, it’s a taxable event.

“It’s a two-step transaction. For example, if you’re using BTC to buy EOS, you are treated as if you are selling BTC for USD and then use the USD to buy the second coin, EOS. This situation will recognize a tax gain or loss,” explained Yip.

“People are not prepared and have no idea how to handle this. Whether they pocket the profits or invest in other coins that could go higher, people really need to be prepared for the tax consequences. I’m shocked how people thought as long as they didn’t cash out, they don’t have to pay taxes.”

She gives the scenario of an investor buying BTC at USD 5,000. Now that it’s trading at USD 23K, they might sell it and use the proceeds to buy another coin. Even though they put zero cash back in their pocket, it’s a taxable event.

“From the IRS’ perspective, it’s the same whether you sold at USD 23,000 and pocketed the money or turned around and bought another coin. It’s your choice,” Yip said.

It is a common belief that the majority of crypto investors didn’t report their crypto transactions on tax returns, and as Yip noted, the government needs the money now more than ever with all of the stimulus it is giving away.

“This is an area where they can go after people and get their money back,” she said.

So when the stakes are high and every cryptoasset transaction is a taxable event, when do you sell? According to Yip, it depends on your goals. It makes sense to sell in several scenarios.

  • First, even with bitcoin’s gains, there might be some coins in your portfolio that have proven to be duds. They are just sitting there with an unrealized loss. If you decide you don’t want the coin, take the loss and get out of the coin so you can realize the loss and use it to offset other capital gains.
  • In a second scenario, it makes sense to sell if you need the cash. Investors might find themselves in a situation where they’ve got too much money tied up in the market and none left over to live on or pay taxes. Selling to get the cash makes sense in this case, said Yip.
  • Third, if you think the market is going to crash in 2021 and want to capture this year’s gains, get out of the market. If you’re right and the market goes down, buy-in at a cheaper price and pocket the difference, Yip advised.

By the same token, there are circumstances under which you would want to hold off on selling in 2020.

“If you are looking at substantial gains and if you can wait, it may make sense to wait until Jan. 1, unless you’re scared that when the new year bell rings the market is going to crash. Then it’s not a good idea to wait. But usually, it doesn’t happen like that. If you wait, you can delay your tax liability for 15 months. So that is definitely a good idea if you want to buy more time. If you have a huge gain, your tax liability can be a large amount. If you can wait more than a year, time is money,” said Yip.

Another reason to hodl for the rest of 2020 is if you have plans to be in the market for the long-term. That’s because once you sell, the clock resets and you reestablish your basis and holding period, she explained. And long-term capital gains are better than the ordinary tax rate attached to short-term capital gains.

“If you have coins and want to have long-term capital gains treatment, you probably don’t want to sell. That’s probably the biggest reason you don’t want to sell,” said Yip, adding that if you want to get out of the market but don’t have the money to pay for taxes, don’t sell.

Source: cryptonews.com

Author: By Gerelyn Terzo


Visa Grants Principal Membership to Crypto Payments Platform Wirex | Finance Bitcoin News

Visa Grants Principal Membership to Crypto Payments Platform Wirex | Finance Bitcoin News

Visa Grants Principal Membership to Crypto Payments Platform Wirex

London-based crypto-payments platform Wirex can now issue Visa accounts and process transactions autonomously, as the firm became a principal member of the payments giant.

According to the announcement, Wirex has been added to the European network of Visa as a member after long-lasting cooperation, whose customer base has over 3 million in the APAC and EEA countries. The company enables its users to transfer crypto and fiat currencies globally through the platform.

With the membership, Wirex becomes the second crypto company after Coinbase to get such kind of membership, although this is not the first payment giant the London-based firm partnered with.

On July 20, 2020, the company also teamed up with Mastercard to directly secure a principal membership to issue cards supporting both crypto and fiat currencies.

The latest figures revealed by Wirex show that the company had experienced a 271% increase in the number of crypto exchanges on their platform compared to December 2019. It also launched its first crypto-enabled debit card in 2014.

Cuy Sheffield, senior director and head of cryptocurrency at Visa, commented on the announcement:

Digital currencies have the potential to extend the value of digital payments to a greater number of people and places. We’re excited to work with innovative Fintech’s like Wirex, and enable their customers to use digital currencies at more than 61 million merchants on the Visa network.

Moreover, Pavel Matveev, CEO and co-founder of Wirex, believes that achieving this principal membership from Visa paves the road to catch more opportunities to continue developing “a revolutionary product.”

Wirex is also preparing the ground to land in the US market, as they’re about to launch a single currency Visa card. However, Wirex is not the only one who offers bitcoin-based cards in the crypto sphere, as exchanges such as Binance and Coinbase offer such products.

What are your thoughts on this announcement? Let us know in the comments section below.

Spot-markets for Bitcoin, Bitcoin Cash, Ripple, Litecoin and more. Start your trading here.

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

Source: news.bitcoin.com

Author: Finance

by
Felipe Erazo


What's Next for XRP? Top Crypto Strategist Michaël van de Poppe Analyzes Rapid Drop in Price

What’s Next for XRP? Top Crypto Strategist Michaël van de Poppe Analyzes Rapid Drop in Price

Crypto analyst Michaël van de Poppe is assessing XRP’s price action in the aftermath of the U.S. Securities and Exchange Commission’s actions against the payments company Ripple.

Since the SEC filed its lawsuit alleging Ripple has sold unregistered securities, XRP has dropped dramatically. With the overall crypto market witnessing a 6% correction in the last 24 hours, XRP has crashed much harder, dropping more than 30%.

In a new video, van de Poppe draws potential lines of support as the asset continues to search for a bottom. With XRP at $0.27 at time of publishing, Van de Poppe says it is below two major lines of support, and historically when XRP falls there aren’t many points of resistance on its way down.

“As I’ve been stating that these blocks here at $0.45 was an entry zone, once that’s lost the next one is around $0.30, which is why we get there after such a drop down, there aren’t really levels in between…

The moment [XRP] loses $0.45, the first level you get any point of interest is $0.30 whether or not you get a lawsuit from the SEC.”

Van de Poppe is wary of jumping into XRP, suggesting that with the general altcoin capitulation, there could be some much safer and more advantageous plays for traders.

“Given that we’ve gotten this low in basically one daily candle and given that there is the lawsuit from the SEC… I would definitely not go in for such a risky approach at this point especially given that there are so many altcoins right now at a very interesting level that give way more potential than XRP.”

For those who are considering the asset, van de Poppe outlines what those traders should be looking out for and what he believes are the best and worst case scenarios for XRP. However, the analyst warns his viewers that XRP will likely remain in a limbo zone until the SEC decides Ripple’s fate.

What cryptocurrency will become the main one in a year?
BitcoinEthereum

“In the best scenario we get a relief rally towards this [$0.40 range] and are going sideways again… However, if this is going to happen it’s still going to take a significant period until it bottoms out…

There are two outcomes. One, is that the SEC won’t file charges and [Ripple is] just fined which would be a very bullish outcome for crypto in general and security tokens in general for the US. In that case, we probably have a very bullish market for XRP which would be bullish for the overall markets in itself, but that’s going to take a long time.

In the worst outcome, it’s not going to go well with the SEC and the price will go down even more and most likely there’s going to be D listings which means that you are holding a token that you can’t sell somewhere.”

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Source: dailyhodl.com


MinePlex Creates CrossFi Crypto Bank by Combining Traditional Finances With Blockchain

MinePlex Creates CrossFi Crypto Bank by Combining Traditional Finances With Blockchain

MinePlex Creates CrossFi Crypto Bank by Combining Traditional Finances With Blockchain

PRESS RELEASE. The MinePlex platform announces the creation of a new mobile crypto bank for CrossFi industry that aims to combine the traditional financial instruments with blockchain technologies. The mobile crypto bank is supplied with the functionality that allows using cryptocurrencies in everyday life: paying for clothes, food, gadgets as well as for utilities, internet and other services.

“In fact, we have created a new industry that erased the borders between cryptocurrencies and traditional financial assets. Now our users can buy and sell cryptocurrencies, or pay for everyday purchases by using the mobile crypto bank. And all of this is possible on the single platform”, shared the MinePlex CMO Alexandr Mamasidikov.

At the next stage, MinePlex plans to further develop the project, open the MinePlex university, add new features and grow the user base. By 2023, the number of crypto mobile banking users is expected to reach 85 million globally. By 2024, it is expected to approach a billion.

The MinePlex platform stays at the forefront of the CrossFi market by the constant development of its infrastructure that already includes the crypto mobile bank, debit card tied to cryptocurrencies, two project tokens Mine and Plex, smart contracts for staking these tokens, crypto wallet, and P2P platform for exchanging cryptocurrencies without intermediaries.

“We have already created the CrossFi industry. Now we put our efforts in developing the ecosystem, educating people on how to use the mobile crypto banking that has such advantages as the usability, fast conversion of cryptocurrencies into fiat, lower commissions, opportunities to earn on staking etc”, highlighted the MinePlex CMO Alexandr Mamasidikov.

In 2021, MinePlex plans to integrate more than 20 cryptocurrencies to its wallet.

This is a press release. Readers should do their own due diligence before taking any actions related to the promoted company or any of its affiliates or services. Bitcoin.com is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in the press release.

The post MinePlex Creates CrossFi Crypto Bank by Combining Traditional Finances With Blockchain appeared first on Bitcoin News.

Source

Source: e-bitco.in

Author: adminhttps://e-bitco.in


Bitcoin & Crypto Taxes In US: When to Sell and When to Hodl

Bitcoin & Crypto Taxes In US: When to Sell and When to Hodl

With 2021 in sight, bitcoin (BTC) and other crypto investors in the US are facing a fork in the road. They can cash in on the gains that 2020 has delivered and take profits off the table or continue to hodl until the new year or longer. Whichever way they decide to go will determine when and how much they will have to fork over to Uncle Sam come tax day.

Sharon Yip, certified public accountant (CPA), a crypto tax advisor working closely with crypto tax software company CoinTracking, spoke to Cryptonews.com about the tax dynamics for crypto investors. Yip, whose practice is dedicated to helping cryptoasset investors and blockchain companies dealing with crypto taxes, explained how in 2018, many people weren’t prepared to pay crypto-related taxes.

Many investors lost money as their portfolios tumbled in value. And when tax time came around, she said, they didn’t have the money to cover the bill. So they either intentionally avoided reporting their crypto transactions or simply didn’t know how to.

Now many of those investors are in hot water after receiving notices from the US Internal Revenue Service (IRS) related to 2018. This effort came as a result of US crypto exchanges like Coinbase issuing 1099-K forms to certain customers, which allowed the tax agency to match the forms with individuals who didn’t report their taxes. Investors whose crypto payments exceed USD 20,000 or who have completed more than 200 transactions are the recipients of a 1099-K.

“This is very serious. Based on the people who received the tax notice and contacted us for help, we’ve seen a range of tax assessments go from USD 45,000 to USD 1.5m based on sales proceeds once you throw in penalties and interest,” said Yip, adding that every single time you trade, it adds up. “It’s like a snowball that keeps rolling bigger.”

The IRS classifies cryptoassets as property. Yip’s advice to investors who are looking to capture a profit in this bull market is to have a clear idea about gains and losses and not to make assumptions. CoinTracking advises clients to make tax projections to gauge how much they might owe. Even if you have a full-time job with a W2 and just trade on the side, it might not be enough to cover taxes for capital gains. As a result, you could end up with a large balance due, which could trigger penalties for underpayment.

First and foremost, Yip explained, investors should know that every crypto transaction is a taxable event. The only time it’s not taxable is if you purchase crypto with fiat money, which is akin to buying stock. But if you are buying one crypto with another crypto, it’s a taxable event.

“It’s a two-step transaction. For example, if you’re using BTC to buy EOS, you are treated as if you are selling BTC for USD and then use the USD to buy the second coin, EOS. This situation will recognize a tax gain or loss,” explained Yip.

“People are not prepared and have no idea how to handle this. Whether they pocket the profits or invest in other coins that could go higher, people really need to be prepared for the tax consequences. I’m shocked how people thought as long as they didn’t cash out, they don’t have to pay taxes.”

She gives the scenario of an investor buying BTC at USD 5,000. Now that it’s trading at USD 23K, they might sell it and use the proceeds to buy another coin. Even though they put zero cash back in their pocket, it’s a taxable event.

“From the IRS’ perspective, it’s the same whether you sold at USD 23,000 and pocketed the money or turned around and bought another coin. It’s your choice,” Yip said.

It is a common belief that the majority of crypto investors didn’t report their crypto transactions on tax returns, and as Yip noted, the government needs the money now more than ever with all of the stimulus it is giving away.

“This is an area where they can go after people and get their money back,” she said.

So when the stakes are high and every cryptoasset transaction is a taxable event, when do you sell? According to Yip, it depends on your goals. It makes sense to sell in several scenarios.

  • First, even with bitcoin’s gains, there might be some coins in your portfolio that have proven to be duds. They are just sitting there with an unrealized loss. If you decide you don’t want the coin, take the loss and get out of the coin so you can realize the loss and use it to offset other capital gains.
  • In a second scenario, it makes sense to sell if you need the cash. Investors might find themselves in a situation where they’ve got too much money tied up in the market and none left over to live on or pay taxes. Selling to get the cash makes sense in this case, said Yip.
  • Third, if you think the market is going to crash in 2021 and want to capture this year’s gains, get out of the market. If you’re right and the market goes down, buy-in at a cheaper price and pocket the difference, Yip advised.
  • By the same token, there are circumstances under which you would want to hold off on selling in 2020.

    “If you are looking at substantial gains and if you can wait, it may make sense to wait until Jan. 1, unless you’re scared that when the new year bell rings the market is going to crash. Then it’s not a good idea to wait. But usually, it doesn’t happen like that. If you wait, you can delay your tax liability for 15 months. So that is definitely a good idea if you want to buy more time. If you have a huge gain, your tax liability can be a large amount. If you can wait more than a year, time is money,” said Yip.

    Another reason to hodl for the rest of 2020 is if you have plans to be in the market for the long-term. That’s because once you sell, the clock resets and you reestablish your basis and holding period, she explained. And long-term capital gains are better than the ordinary tax rate attached to short-term capital gains.

    “If you have coins and want to have long-term capital gains treatment, you probably don’t want to sell. That’s probably the biggest reason you don’t want to sell,” said Yip, adding that if you want to get out of the market but don’t have the money to pay for taxes, don’t sell.

    As a general rule of thumb, CoinTracking advises clients to set aside 35% of their gains to cover federal and state taxes.
    ___
    Learn more:
    Ethereum 2.0 Has Another Mystery – Taxes
    Banks Should Pay Interest on CBDCs to Reduce Tax Avoidance – Report
    OECD Says It Is Working on Crypto Tax Reporting Standards for 2021
    The OECD Wants to Tax Your Crypto to Pay for COVID-19 Recovery Efforts
    Crypto ‘Is Now Finally Being Taken Seriously’ By Taxman – PwC
    Crypto Earnings from Microtasks Still Taxable in the US – IRS

    Source

    Source: e-bitco.in

    Author: adminhttps://e-bitco.in


    Visa Grants Principal Membership to Crypto Payments Platform Wirex

    Visa Grants Principal Membership to Crypto Payments Platform Wirex

    Visa Grants Principal Membership to Crypto Payments Platform Wirex

    London-based crypto-payments platform Wirex can now issue Visa accounts and process transactions autonomously, as the firm became a principal member of the payments giant.

    According to the announcement, Wirex has been added to the European network of Visa as a member after long-lasting cooperation, whose customer base has over 3 million in the APAC and EEA countries. The company enables its users to transfer crypto and fiat currencies globally through the platform.

    With the membership, Wirex becomes the second crypto company after Coinbase to get such kind of membership, although this is not the first payment giant the London-based firm partnered with.

    On July 20, 2020, the company also teamed up with Mastercard to directly secure a principal membership to issue cards supporting both crypto and fiat currencies.

    The latest figures revealed by Wirex show that the company had experienced a 271% increase in the number of crypto exchanges on their platform compared to December 2019. It also launched its first crypto-enabled debit card in 2014.

    if (!window.GrowJs) { (function () { var s = document.createElement(‘script’); s.async = true; s.type = ‘text/javascript’; s.src = ‘https://bitcoinads.growadvertising.com/adserve/app’; var n = document.getElementsByTagName(“script”)[0]; n.parentNode.insertBefore(s, n); }()); } var GrowJs = GrowJs || {}; GrowJs.ads = GrowJs.ads || []; GrowJs.ads.push({ node: document.currentScript.parentElement, handler: function (node) { var banner = GrowJs.createBanner(node, 31, [300, 250], null, []); GrowJs.showBanner(banner.index); } });

    Cuy Sheffield, senior director and head of cryptocurrency at Visa, commented on the announcement:

    Digital currencies have the potential to extend the value of digital payments to a greater number of people and places. We’re excited to work with innovative Fintech’s like Wirex, and enable their customers to use digital currencies at more than 61 million merchants on the Visa network.

    Moreover, Pavel Matveev, CEO and co-founder of Wirex, believes that achieving this principal membership from Visa paves the road to catch more opportunities to continue developing “a revolutionary product.”

    Wirex is also preparing the ground to land in the US market, as they’re about to launch a single currency Visa card. However, Wirex is not the only one who offers bitcoin-based cards in the crypto sphere, as exchanges such as Binance and Coinbase offer such products.

    What are your thoughts on this announcement? Let us know in the comments section below.

    The post Visa Grants Principal Membership to Crypto Payments Platform Wirex appeared first on Bitcoin News.

    Source

    Source: e-bitco.in

    Author: adminhttps://e-bitco.in


    Bitcoin & Crypto Taxes In US: When to Sell and When to Hodl

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