- Every transaction you make in the crypto world could be a taxable event
- Not enough people are taking it seriously, meaning they could land in big trouble
- Recording your crypto transactions takes seconds and could save you a fortune down the road
With Bitcoin going absolutely crazy over the past couple of months, more and more people have been buying, trading and selling their Bitcoin than ever before. Everyone from famous celebrities to your postman has been getting involved, but are you about to run afoul of the tax man?
Depending on where you live, and how much you’ve made in the crypto world, you could owe the tax man a sizeable amount of cash. If you don’t own up and he finds out, you could then be in a whole world of trouble. So, di yourself a favor and make notes about every crypto transaction you make – it’ll save you a huge hassle in the long run.
Capital Gains Needs to Be Paid
Virtually every country around the world now has some form of crypto tax laws, and it’s really important that you understand the laws for your country. For example, in some countries crypto is taxed as business earnings, meaning you pay less in taxes, while others categorize it as property, meaning you have to pay a lot.
In order to get regulated in a lot of jurisdictions, cryptocurrency exchanges are obliged to share their user data with the local tax man, providing feedback on your balances and activity with the tax man. So, if you don’t declare how much you owe from crypto trading and the tax man finds out, you could be in a world of trouble.
Play it Safe and Keep Records
Fortunately, most crypto exchanges have a trade history tab, giving you access to all of your trades with the times and prices marked. Some, however, do not have this feature. So, whenever you complete a trade, whether it’s buying or selling, put the date, time, price and amount into an excel sheet.
You can then use this sheet to build up a list of every transaction or trade you make, to keep tabs on whether you’re up or down for the year. Best of all, if you’re down, you could claim capital loss, meaning you can get a bit of a tax rebate – it cuts both ways.
Don’t Be the Next McAfee
For all of you that are new to the crypto world, it’s time to start taking paying your crypto taxes seriously. There are a few apps you can use to import all of your data, making tax time even easier. Whatever you do, make sure you declare your crypto, otherwise you’ll find yourself being the next John McAfee banged up in jail for tax evasion.