- January 16, 2019
- Posted by: giancarlo
- Category: Posts
Americans who sold Bitcoin last year saw $1.7 billion in realized losses and $5.7 billion in unrealized losses according to survey performed by American personal finance company, Credit Karma. The $1.7 billion figure comes out to $718 in losses per Bitcoin investor.
Despite these sizeable losses, the survey found that only 53% of American Bitcoin investors plan to report their gains or losses on their taxes, and 19% haven’t made up their mind. What’s more, 35% who sold at a loss do not plan to report these losses, which Credit Karma rightly states could be a mistake, as they could be used to offset capital gains and, to an extent, their earned income.
However, 58% of investors who made a profit on trading Bitcoin said they planned to report these gains. Whether due to a failure to understand the tax code as it pertains to Bitcoin — indeed, 35% of those surveyed falsely believed they were not required to report any Bitcoin gains or losses — or a decision to defiantly stand on principle, this decision could also prove costly in the form of a a future audit and the potential penalties that could come as a result.
In light of this surprising data, the survey concludes that education about cryptocurrency reporting would be beneficial to the American public. In 2014, the IRS issued guidance on the taxation of cryptocurrency trading that includes a helpful Q&A section. Traders who bought or sold Bitcoin can often download their account history off the exchange they use in order to help file their tax return. For those that use multiple exchanges and engage in altcoin trading, services like Blockfolio and Coinlib can also help you keep track of your trading activity. In either case, though, how long you hold your crypto will affect whether they represent a short term or long term capital gain — an important distinction for tax purposes.
No matter how or when you file your taxes, it is important to consult a tax professional first if you are confused as to what you may need to declare.