Nobody likes filling in their tax return forms, especially if they are hodling cryptos. Tax returns can be confusing at the best of times and throwing crypto hodlings into the mix makes things even more difficult. Very few governments have stated the payable rate on any crypto hodlings – or trading activity – which has led to a record number of tax returns being filled out incorrectly.
Most governments will most likely let it slide for this tax season, but for the next one, governments will be more prepared. Poland has recently created new tax legislation that explains the rates payable on crypto hodlings, while Colombia is going to slash all taxes for crypto firms. This is where Zenledger steps in. It’s a new mobile app that’s compatible with every exchange and wallet, with it having the power to automatically fill in the related parts of your tax return forms – impressive, don’t you think?
Removing the Headache from Crypto Taxation
Zenledger will collect your data from the exchanges and wallets you pair it with. From there, it will do all the math for you. It will help explain taxable events and tax-deductible events to ensure you only pay the necessary amount, not a single cent more. In America, the Internal Revenue Service (IRS) is actively looking into everyone that uses cryptos as a form of tax evasion. So, it’s best to be safe and make sure you declare the correct amount – don’t get caught out.
The IRS Knows What You’ve Traded
No matter how discreet you try to be, if you use an exchange or wallet that has some form of known your customer (KYC) checks in place, the IRS will know exactly what you have been up to. Similarly, the DEA prefers it when criminals use Bitcoin over fiat cash, as it can trace those transactions with greater ease. KYC essentially ties your wallet to your profile. As such, the IRS can request information on you from any exchange in the world, just as it does under the FATCA laws for traditional stock trading.
Crypto Taxes Are Confusing
Most countries around the world have not yet outlined how much tax is payable on crypto assets and trading, which is making the taxation process confusing for individuals. Coupled with the fact many crypto hodlers are inexperienced traders – as well as not fully understanding the asset class – is making tax time more confusing than necessary. Apps such as Zenledger are trying to make this process simpler. However, if it isn’t compatible with your region or your government hasn’t yet defined the payable rate on cryptos, it’s best to contact your local inland revenue department in order to get the correct information.