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The taxation of Bitcoin capital gains in the US has always been a controversial topic. For a lot of people, it is still rather cumbersome to do so. It is not surprising to see few people effectively report this income to the IRS right now. Less than 100 people have reported any Bitcoin gains or losses so far. This does not seem to add up when looking at the bigger picture. It is possible this situation will change in the near future, though. For now, the IRS will keep monitoring this situation.
Over 250,000 individuals have filed federal taxes through Credit Karma Tax this year. That is a healthy number, but things are not adding up. Of those reports, less than 100 individuals reported a cryptocurrency transaction. Even though the IRS wants these capital gains taxes, most users seemingly don’t bother filing. Everyone knows there are a lot of Americans who hold or trade cryptocurrencies these days. All of them should be reporting capital gains to the IRS as of this year.
Report Your Bitcoin Holdings to the IRS
For the time being, it remains to be seen how this situation will evolve. A recent survey shows how over half of the people questioned never reported cryptocurrency gains to the IRS. It is evident that is not the best course of action for any party involved. After all, the IRS is cracking down on Coinbase users already thanks to a recent court case. It is not unlikely they will go after other exchanges to get the information they need either.
Cryptocurrencies such as Bitcoin are considered to be a property for federal tax purposes. As such, it is in everybody’s best interest to report capital gains to the authorities. It is unclear if there will ever be major penalties for not doing so, though. Avoiding taxes is never a smart idea, especially not in the United States. Any profit or loss made from the sale or exchange of these currencies needs to be reported. There are various tools out there to help Bitcoin users out in this regard.
No one knows for sure how many Americans hold a cryptocurrency portfolio as of right now. With the pseudonymous nature of cryptocurrency, it’s only normal tracking down this activity is pretty difficult. With more blockchain analysis companies popping up, the truth will come out eventually, though. For now, no one is really surprised so few people report Bitcoin capital gains and losses. It is possible things will improve once we get closer to the deadline. That deadline is set to expire on April 17th of this year.