Cryptocurrency 2017 Taxes: Uncle Sam Wants His Cut
I came across this reddit post the other day and found it to be an informative discussion on crypto taxes for 2017. Many anarchist will tell you not to even bother, however I strongly recommend remaining a law abiding tax payer (I recognize with the new tax bill this is becoming even more troublesome, but we must be prepared to protect ourselves and follow the law of the land.
Link: https://www.reddit.com/r/CryptoCurrency/comments/7nzqky/2017_taxes_we_need_to_get_serious/
Cryptocurrency has always been taxable, the basic question is what constitutes a gain, and when the tax is due. The trading of cryptocurrencies is also clearly different from the mining of them. My own understanding is that the €12,000 value that I have apparently gained in the last month on Steemit only becomes taxable when it is cashed out into fiat. Likewise with my Gridcoin holdings, as it is my Euro gains that matter. Different tax rates may also apply. In the case of Steem I am earning income from writing, but in the case of Gridcoin I could be regarded as mining it through BOINC activity. In all events expect to see compulsory registration of cryptocurrencies soon.
The new US Tax Code from my understanding makes it so any transaction wether it be crypto to crypto or crypto to fiat is a taxable event, along with transacting crypto for a good or service and being paid in crypto.
That is interesting, because essentially it is recognising cryptocurrency as a form of legal tender. It also seems to imply that losses would be tax deductible. It is, however, problematic in that it would force you at some point into USD to meet tax obligations, and that implies that there will be a key period when a lot of US sellers will be moving at least part of their cryptocurrency into US fiat as part of a forced sale. Sounds like a good moment for non-USA residents to time for buying into the market.
Tax season is going to be a shit show, how any trader using multiple exchanges could find and file all of their transactions is beyond me. Losses are and have been tax deductible.
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