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4 Useful Bitcoin Tax Reporting Advice and Profit Loss Tracker Tools

Bitcoin is in a constant state of flux. One day, the value of Bitcoin is at the all-time high, only to crash the very next day before the whole cycle repeats. Exchanges and Bitcoin-related services come and go, and lawmakers can barely keep up with the booming world of cryptocurrencies. In this environment, it’s not easy to keep track of your coins and stay on top of your financial and legal obligations. Fortunately, there are plenty of great tools and communities that you may turn to for help and advice.

Disclaimer: As helpful as they are, the tools and resources featured on our list do not constitute financial, tax, or legal advice as they are provided for information purposes only. For financial or legal advice, please, consult your own Certified Public Accountant.

Want to streamline your Bitcoin tax calculations? We recommend these two services:

CoinTracking

With CoinTracking, you can analyze your past Bitcoin trades and generate real-time graphs and charts that clearly show the value of your coins, realized and unrealized gains, and more. You can group transactions by exchanges, use the interactive search functionality to quickly find the transaction you’re looking for, and prepare the necessary information and documents for tax declaration.

To start using CoinTracking, all you need to do is create a new account, import your previous trades from exchanges and wallets, and that’s all. If you don’t know how to import data from exchanges, don’t worry. CoinTracking has created a comprehensive support page that explains everything in detail. Make sure to also install the official Android app so you can track your Bitcoin no matter where you are.

Keep track of live Bitcoin price with the Bitcoin Clock Android app.

Coinbase

Coinbase is one of the most popular Bitcoin exchanges and wallets. While they can’t provide users with any tax or legal advice, they do provide a specialized Cost Basis for Taxes report which will help with filing your taxes. Using a FIFO (first in first out) method, Coinbase provides a summary of your digital currency purchases and sales, showing your cost basis and capital gain/loss.

On the official support page, Coinbase advices its clients to keep their own records for best results and update the report accordingly because the tool is still in beta. To generate a new report, visit this page and click on the New Report option in the upper-right corner. To always see the status of your Coinbase account and wallet, download the official Android app.

Reddit Bitcoin Forum

The /r/bitcoin and /r/btc subreddits are fantastic sources of expert Bitcoin advice. These subreddits are frequented by legal professionals and certified tax attorneys who can accurately and reliably answer just about any Bitcoin-related question regarding taxation.

This post, for example, is an excellent primer on Bitcoin taxation, answering the most common questions that Bitcoin users have about the taxation of the cryptocurrency. We strongly encourage you to subscribe to the two above-mentioned subreddits. It’s also a great idea to install the official Reddit Android app to enjoy a more refined user experience on your mobile device.

Bitcoin.Tax

BitcoinTaxes is a handy tax calculator that can show you a capital gains report detailing every transaction’s cost-basis, sale proceeds, and gain as well as an income report with all the calculated mined values, a donation report with cost basis information for gifts and tips, and your closing report with your net profit and loss and cost-basis going forward. These reports can be calculated using different cost-basis methodologies, depending on your preferences.

Using the service is as simple as importing your Bitcoin transactions and going through a few simple steps. While BitcoinTaxes doesn’t have an Android app, the website is well-optimized for mobile devices.

Want to streamline your Bitcoin tax reporting? We recommend these two services:

How to Avoid Paying Taxes on Bitcoin Legally For US Citizens in 2019

It’s that time of the year again, Uncle Sam is about to come knocking and shake you down.  Taxes are never fun, especially if you are coming off the high of all the crypto gains from the past year.  Isn’t the whole point of bitcoin is to be decentralized so nobody can control YOUR money? That’s another conversation for another day.  Lets get back to reality.  If you own bitcoin or are thinking about investing in bitcoin, let’s go over legal ways for you to avoid paying taxes in the United States.

Want to keep your bitcoin tax calculation simple? We recommend these two services:

Buy Bitcoin In Your 401k

This is an indirect way to own bitcoin.  You can buy the Bitcoin Investment Trust stock (ticker GBTC) in most stock brokerage accounts.  GBTC is an OTC stock that’s essentially an ETF with one asset.  With each share of GBTC you are owning 0.001 bitcoin.  So you would need to buy 1,000 shares of GBTC to own a whole bitcoin.

The advantage of buying GBTC over actual bitcoin is that you don’t need to worry about the security issues with bitcoin wallets, and tax reporting is extremely straightforward, any stock brokerage, such as SureTrader, will calculate long term and short term taxes on your GBTC trades just like another other stocks.

To avoid paying taxes legally on GBTC, you just need to find a tax efficient way to own GBTC stock.  The most common way is your 401k.  Or for the less fortunate, if you had huge carryover capital losses from previous years, you can offset all your future GBTC gains with the carryover losses and not pay taxes on it as well.

Before you buy, we should note that GBTC does trade at a high premium to NAV, trading typically around 60% to 80% premium to the actual price of BTC.  That is due to the high liquidity of this stock and the fact that it is extremely low maintenance compared to owning actual bitcoin.  As long as planned bitcoin ETF’s do not get approved in the near future, GBTC is the only game in town as far as bitcoin ETFs go, so GBTC should continue to trade at this preimum level until competition arrives.

HODL Your Bitcoin

This is the simplest way to avoid paying taxes.  Just HODL!  Cryptocurrency is considered a property by the IRS, so just like real estate, if you do not sell, you will not have to pay taxes.  When we say HODL, we mean do not touch it at all.  Do not spend your bitcoin, do not trade your bitcoin for other coins, and definitely do not sell your bitcoin for fiat.  Any trades from your original bitcoin holding will be considered a tax event, so if you traded your bitcoin for ethereum, IRS will consider that as a bitcoin sale and you would have to report your bitcoin profits or losses at that point.

Give Up Your US Passport

This is obviously the most extreme scenario of all.  If you do not want to pay the all mighty Uncle Sam, then giving up the United States citizenship might be an option for you.  Many celebrities, such as Jet Li and Eduardo Saverin (Facebook co-founder) have chose to renounced their U.S. Citizenship in order to save on their taxes.

To save on your bitcoin gains, there are several countries with favorable cryptocurrency tax rules.  Countries like Singapore, Germany, and Denmark are known to be crypto tax safe havens.

Want to keep your bitcoin tax calculation simple? We recommend these two services: