The US recently issued a reminder that cryptocurrencies are taxable, and the must be declared, and yet, despite the deadline finally arriving, there are still only a fraction of people who have reported their cryptocurrency holdings.
Credit Karma Tax have revealed that of the 250,000 files on their platform, fewer than 100 people have reported their capital gains on cryptocurrency investments. The general manager, Jagiit Chawla issued a statement, saying;
“There’s a good chance that the perceived complexities of reporting cryptocurrency gains are pushing filers to wait until the very last minute…I want to reassure people that it’s not as complex as it may seem at first glance and that Credit Karma Tax has a number of resources about how to approach Bitcoin and taxes.”
The US sees Bitcoin, and other cryptocurrencies as a taxable asset, because the IRS views Bitcoin as property, making them subject to capital gains tax. That said, this only applies to cryptocurrencies that have been purchased this year, and if an investor is holding onto virtual currencies that were purchased last year, then no taxes are owed at all.
Last year, Bitcoin had a fantastic year, and multiplied more than 13 times, causing the entire crypto market to gain. The same cannot be said for this year however though, and traders have played a part in seeing Bitcoin drop by more than 40% this year alone. Speaking of the lack of people who have reported their earnings, Elizabeth Crouse, who is a Seattle based partner at law firm K&L Gates, said;
“If I had to guess, there’s probably a lot of underreporting…Most of the people in the cryptocurrency world tend to have a pretty high risk tolerance.”
However, there is a big warning to those who are not reporting, and that is that they are simply far more likely to increase the risk of IRS coming knocking.