Bitcoin & Cryptocurrency Taxes in a Nut Shell | Capital Gains, Crypto Tax Fairness Act & More



hey what is going on guys what has happened in my name is Johnny you've tuned in to rules for rebels and today we're talking about Bitcoin and cryptocurrency taxes so let me start off here by saying I am NOT an accountant I'm not a financial adviser I'm not even necessarily an expert in this category but I have been doing a little bit of research have been trying to understand this myself and as a business owner and somebody who has traded like stocks and things like that in the past I do have some understanding of taxes and capital gains and whatnot and I'm always kind of surprised when I read on like Reddit and kora a lot of misinformation is being given out there to people in terms of like what's taxable what's not taxable I know a lot of people are like really naive in terms of like hey I've never sold any cryptocurrency but I've heard I'm gonna have to pay all these taxes like you're only gonna have to pay taxes when you sell cryptocurrency to Fiat so I guess my aim in this video is to as simply and briefly and concisely as possible kind of break down a lot of kind of the common misconceptions and or you know questions that you guys may have about cryptocurrency when it comes to taxes now I have a couple things on the screen here that I'm gonna be showing you guys as well this is Bitcoin tax you're looking at right now we're gonna get into first-in first-out versus lastin first-out and some of the other ways that you can maybe choose to report your gains we're gonna talk about some legislation regarding purchases under $600 being immune from to capital gains we're gonna touch on an article here that talks about how you should report ie first in first out last in last out etc and then we're gonna take a look at the capital gains rate so you guys can kind of see you know what you may wind up owing now let me start off by saying I am NOT a financial adviser I'm not an accountant this is my advice my understanding I would recommend you consult your own accountant if you're dealing with like real money in the crypto space I would definitely recommend having a like that doing your own turkey taxes on TurboTax yeah it'll cost a couple hundred bucks verse you know 50 or 80 bucks or whatever TurboTax charges but a good accountant will actually wind up saving you probably a lot more money than that and you'll make sure that things are done right in the first place like I said I'm kind of surprised by how much misinformation there is out there when I read people giving like advice and read it or Cora and things like that a lot of things are just flat-out wrong that I'm hearing and I see a lot of people who really you know are really kind of confused and worried like oh my gosh I'm am I gonna owe all this money well if you haven't sold any cryptocurrency for Fiat you're not gonna own money you're not going to any money but basically this is just kind of my attempt to maybe educate people a little bit on this hopefully kind of clear up the picture for you a little bit I know personally I haven't done a lot of trading in the past because I kind of thought it was gonna be like a show at the end of the year trying to figure everything out up until recently there haven't really been a lot of good systems for figuring out your capital gains short of life going through an excel sheet line by line and like attempting to figure it out you have some programs like alt pocket and quaint tracking down info and I've tried some of those coin tracking that info isn't terrible it's not a hundred percent accurate just recently downloaded Bitcoin tax they charged me 1995 for 2017 1995 for 2016 and I wasn't really doing any training prior before that it was more buying and holding so from like 13 to 15 you I think for 50 bucks or 100 bucks you can buy like a three-year package I don't need that one I'm not an affiliate for Bitcoin tax so you don't even have an affiliate program so I'm not saying this to get you to buy it so I make an affiliate income I have nothing to gain by this so let's see it's kind of straight into this so first things first if you hold Bitcoin or cryptocurrency for longer than a year it's considered a long-term capital gain and it's taxed at 15% I'm pretty sure about that I don't believe it matters what tax bracket you're in I think long-term capital gains across the board are taxed at 15% and if anybody you know if any of you guys are accountants or if I misspeak or say anything that's not true feel free to correct me in the comment section below you hold Bitcoin or crypto currencies for shorter than a year it's a short-term capital gain and I believe this one depends on your tax brackets so if we take a look at this chart right here if you make zero to ninety nine thousand three hundred twenty-five dollars a year you're gonna be in the ten percent tax bracket so you're gonna pay ten percent capital gains if you make nine thousand three hundred to thirty seven thousand dollars per year as a single person or filing jointly as a married couple eighteen to seventy five your 15 percent right here here's what the current okay yeah this is right okay if you make between 90 1901 and a hundred ninety one thousand is a single person you're at the twenty eight percent tax bracket as a married couple I would be a hundred and fifty thousand fifty three thousand to two hundred and thirty three thousand so you can kind of look at this chart you you know what your income is you kind of know where you fall in terms of capital gains so in terms of like a little bit more strategy in terms of like should you sell should you hold etc if you hold your cryptocurrency your Bitcoin for over a year you're gonna pay significantly less in taxes that said a year is an incredibly long time in the cryptocurrency space if Bitcoin shoots up to a you know a new all-time high of twenty thousand dollars you may say oh you know I'm gonna hold out of this for a year because I don't want to pay these you know huge debt short-term capital gains rates but it's very possible three months from now it's gonna go from twenty thousand down to fourteen thousand and that six thousand dollars you lost in the price declining is gonna cost you a lot more than you know an extra what's that thirteen or fourteen percent in in tax rate would have cost you so that's kind of a strategy that you're gonna have to plan out for yourself you kind of got away that benefit in terms of figuring out your taxes if you don't do a lot of trading it's gonna be fairly easy right I do weekly dollar cost averaging so what that means is every week I have a certain amount of money that every Monday goes in do like coin every Monday goes into a theorem and every Monday goes into bitcoins so you know it's easy if I buy five thousand dollars worth of Bitcoin erai Bible in Bitcoin and then a month later I sell one Bitcoin and okay I bought one Bitcoin for five grand I sold one Bitcoin for seven grand I made two thousand dollars I owe 28 percent of that like to that that's pretty straightforward right but when I'm buying $50 every week and then you know six months later I wind up selling $2,200 you know it gets a little bit trickier trying to figure out you know okay I had fifteen buys for $50 but then I had this sale for this so this is where some of these softwares and things like that kind of come in see I recently okay so in regards to that like I said you have all pocket Klink tracking dot info and I recently bought Bitcoin tax I'll kind of briefly show you guys what that looks like but basically what you can do is you can either pull Excel files like of your trading activity from either coinbase jitta X bit Trax baloney X Kraken etc etc etc and you can upload them into a lot of these sites most of these sites also have an API feature so basically I can give them access to me and my coin base orgy tax account for anybody who's like oh I I don't want to give any third party access to my trading accounts it's view only access so just to give you guys a quick example there are trading BOTS out there that you can say okay I'm gonna set this up to my coinbase wedgied X account and when Bitcoin goes up 10% it's automatically gonna sell and when it drops 10% it's automatically gonna buy and you have a bot doing your trading activity for you now you need an API access to do this and when you do it you're giving them access to trade right and that's kind of dangerous because you're giving somebody access to do something within your account with Bitcoin tax and coin tracking and a lot of these softwares you're only giving them view access so they can view the information in your account but they're not able to make trades or not able to make transfers etc so if any of you guys are worried about that I just wanted to point that out I just got this Bitcoin tax within like the past two days and it's made me a lot more calm well Justin knowing that okay I will be listing your things out at the end of the year coin base does if you go to your coin base account and click at the top the tools tab there's a tab that's called reports now you can pull a report on all your by is all your cells your trading activity or cash outs and they do have one that it says it's a beta version and it's a I think it's supposed to figure out your taxes for you or something like that one thing to be aware of because these numbers are flawed it's not a perfect thing if you're only buying and selling on coin base in GTX it's perfectly fine right the challenge okay the challenge is if you ever transfer money off of coin base or GDX to either an external trading platform or even an external wallet let's say you have a ledger wallet you have a treasure wallet you have an electrolyte the way that coin basis report pulls if I send five Bitcoin off of coinbase to my treasure wallet they're considering that a sale in in reality that's not a sale that's not a taxable event but the way that the report shows up it will show as if you sold five Bitcoin and in reality that wasn't a sale so if you never transfer your money off coin base or GDX their report that you can pull for capital gains may be accurate I would still look over it yourself and I have a tax professional look over it but if all your activity is on the coin base in G Dax which it really probably shouldn't be you should probably have a hardware wallet but that would be fine as soon as you start transferring over there coin basis beta testing tax thing goes completely out the window I know GD X for a long time has had something that supposedly it's gonna help you figure out your your losses and gains it's it still hasn't rolled out and I think with this recent IRS announced but if you guys I probably should have mentioned this earlier in the video but if you guys haven't heard a judge has ordered coin base to turn over user records between 2013 and 2015 for anybody who had over twenty thousand dollars worth of trading activity in court buys or sells and or transfer activity in it in that example I kind of explained how a lot of people are like oh well that only affects rich people well not really is somebody who's a day trader and traits like 100 bucks a day over three you know over 365 days in the year that's gonna add up to a lot of trading conversely let's say somebody buys $5,000 worth of bitcoins and they sold out another you know into coinbase so to speak for five grand they send that five grand over to a treasure wallet or an electron wallet so that a $5,000 transfers so $5,000 buy-in $5,000 transfer it brings us up to ten grand let's say I decide you know the price is pretty high I think I'm gonna sell this I have to transfer it back to coinbase right so when I transfer it back – coinbase that's another five grand transferred in so we're at fifteen thousand and let's say I say okay you know I'm gonna sell this so I wound up selling my Bitcoin at five thousand dollars sale five ten fifteen twenty we're at 20,000 it's very possible I lost money it's very possible I broke even it's very possible I made a very small amount of money but coinbase is gonna report it be reporting to the IRS that I had twenty thousand dollars worth of activity now that's not to say that I have to pay twenty thousand dollars in taxes or even if I've had twenty thousand dollars in games but it's my responsibility to kind of notate what my cost basis is what I sold for and what my profit was so that at the end of the year I can say look even though there was twenty thousand dollars worth of trading activity I only made three hundred dollars and I only owe twenty-eight percent of that and maybe touched on this earlier but I think I was giving the example of like a Shopify store a Shopify Shopify payments PayPal all these guys I believe its if you do over 200 transactions per year and over twenty thousand dollars in sales they're required to do a 1099 on you so they're gonna give that you know let's say you sell twenty five grand worth of product they're gonna send a 1099 to the government showing this guy had twenty nine there twenty five thousand dollars come in now let's say I was selling items for a hundred dollars those items cost me ninety dollars I turn around sell them for $100 and make a ten dollar profit well Shopify PayPal whatever is telling the IRS I did twenty five thousand dollars in sales well I have to go through all these sales and say okay stay on when I bought it for ninety I sold it for a hundred that's only ten dollars sale number two I bought it for ninety I sold it for a hundred that's only $10 so out of that 25,000 I've really only profited to the tune of 2,500 so a little bit off-topic but just kind of want to kind of help you kind of wrap your heads around like kind of the record-keeping required and why you want to keep accurate records the next thing I wanted to touch on is like kind exchanges so right now we're kind of getting into you might hear a lot of people say I don't want to sell my Bitcoin for fiat because I don't want to pay the taxes on it so a lot of people seem to be under the impression that if I take my Bitcoin bitcoins up with theorems down rather than cashing out my Bitcoin for dollars I'm gonna sell my Bitcoin for a theory in a sell my Bitcoin for liske or our core Stratus or nem or whatever other cryptocurrency and there is something in the IRS code called a like-kind exchange now I'm not an expert in this I'll give you kind of an example so I believe there's something with real estate so if I buy a house for $100,000 a couple years later I sell it for $200,000 I believe I would normally Oh long term capital gains and $100,000 in profit well I believe in and again I'm not I've never done this before this is just something I hear about I believe there's something called a like-kind exchange and I believe there's a time period on it as well so we'll say as long as I take the profits from that real estate sale and purchase another house within I don't it's 90 days or six months but as long as I purchased another house within that time period my gains can be rolled into that next investment and I don't have to pay to cap capital gains on it that said I don't think I would be able to sell that house and then use some money to go buy silver coins because they're not like kind so a lot of people kind of like to think or make the argument that crypto for crypto is a like-kind exchange and until you go to Fiat you're not having to pay tax so they're not having to pay capital gains every accountant I've talked to most articles I read it I think people would like to think that's how it works in reality and I've heard some arguments as to why this is but crypto for crypto doesn't seem like it's gonna be a like-kind exchange typically the IRS doesn't do anything that helps us or benefits us or favors us and that's what I like exchange would do so I don't think that's going to be the case so even if you sell Bitcoin for a theory of Bitcoin for like coin whatever else that is a taxable event that you are gonna have to pay capital gains on those those games that you've made know where things get even more complicated is okay now you send your money over to bid track and you start trading on there and then you have all this money flowing through different exchanges and keeping track of what you bought at these prices so that's where things can get really kind of complicated but yeah it's just one thing I wanted to touch on I don't believe it's gonna be treated as a like-kind exchange in terms of how to calculate capital gains I'm kind of an interesting article that I thought we would touch on so let me take you over to a Bitcoin tax report here so here's kind of the different cost basis is right so long-term capital gains if we were used to first in first out method the estimated tax is 2258 dollars and 60 cents on if we were to use average cost it would be 1996 dollars if we do highest cost first out it's $1400 and basically what this means is like first-in first-out is whatever bitcoin i buy first when i sell that's the first one that sells lastin first-out is my most recent bitcoin purchase goes against my or my most recent bitcoin sale goes against my I'm sorry I feel like kind of a mindfuck here my most recent Bitcoin sale goes against my first purchase there's something else I forget what it's called but basically where you can pick and choose which sale you want to match up with which which purchase but I saw an interesting article which kind of explains this let's see here so this article is from brave new coin and capital gains on crypto first in first out last in first out were specific identification so Jeff andrew jr. says see I regularly receive inquiries around the country regarding how gains and losses on cryptocurrency transactions are taxed unfortunately to date the IRS guidance has been limited you know let's see the data okay so this is from November 7th 2017 pretty pretty recently IRS guidance has been limited to notice 2014 21 which will it doesn't tell us a whole lot does make the following clear for tax purposes cryptocurrency is property in that currency unless you are in the business of selling cryptocurrency the gain or loss from any sale of cryptocurrency is a capital gain or loss similar to a stock bond or mutual fund 0.2 has caused a lot of cooking point to has caused a lot of confusion when a tax payer sells a stock bond or mutual fund assuming all his shares being sold are identical he has several options regarding gain or loss the most common of which are he can record the transaction on a first in first out basis fi fo this means if I own a hundred shares of Microsoft and I sell ten the ten I sell are deemed to be the first ten I purchased I can record the transactions as last and excuse me last in first out this means if I own 100 shares of Microsoft and I sell ten the ten I sell are deemed to be the last that I purchased he can record the transactions on a specific identification basis this means if I own a hundred shares of Microsoft and sell ten i specifically identify to my broker which 10 I want to sell no I wanted to get a little bit sidetracked I know I'm probably gonna lose a couple people because this part is kind of long I did want to touch on something important at the end of this video so hang on hang on there's a lobbying proposed that would end capital gains taxes on purchases under $600 so right now if I buy a slice of pizza for $5.00 with Bitcoin I'm supposed to figure out how much I've profited on that five dollars worth of Bitcoin and if I'm up 20% on Bitcoin on that $5 Pizza I should probably pay 20 40 60 80 I should probably pay $1 in tax now it's not really reasonable for people who actually spend Bitcoin to make them figure capital gains out of every purchase so there's a law proposed at any purchase under $600 would be immune from capital gains taxes and what's kind of cool about that that would essentially allow you to live off of your bit profits without ever having to pay taxes as long as your purchases are under $100 $600 and that's really interesting I'm gonna touch on it at the end so stick around with me for that part but getting back into the first-in first-out thing when selling a portion of a given holding of a cryptocurrency may have applied these same rules it was shouldn't all this end okay so essentially saying you would think that the same rules would apply to cryptocurrency as stocks be said that's not the case Treasury regulation 1 – 10 12 – 1 a sets forth the general rule for determining cost basis in the sale in general the basis of property is a cost thereof the cost is the amount paid for such property in cash or other property and planning ok so let's see we go skip straight to the plain English in plain English that paragraph means that by default when I sell a stock I have to use first-in first-out the only exception is if I can make an adequate identification an adequate identification is blah blah blah anyhow he says it's doubtful that lastin first-out or an adequate identification is gonna be allowed in the absence we should taxpayers to do so did this gentleman recommends use first-in first-out universally this is the most conservative method as first-in first-out is generally the least Pro taxpayer method so you are going with the method that screws you over the most as you can see here if you know we opted for you know highest cost first out we'd only have to pay 1,400 and taxes but first in first out we have to pay 2258 so this is the most conservative this one is the least friendly to us but you know if we're making money it's not worth getting in any trouble or knowing the IRS you know fines for underpinning our taxes or whatever it's hard to see the IRS go to B list okay so basically saying it's hard to see the IRS issue in the future guidance that would be more friendly to us so you know it seems like first-in first-out is what you want to use and well a basis list concern for specific okay so he says if you use last in first or specific identification this is the most aggressive and you're betting that both this regulation does apply and if it does apply it's an asset which can be accurate adequately identified so for all intents and purposes unless you want to get audited or have some issues you probably want to use first-in first-out and then lastly this article is pretty brief but there's been legislation proposed in the u.s. that would end capital gains tax and bitcoin purchases under $600 a new bill introduced with bipartisan support and tends to create a more fair tax structure for cryptocurrency users titled the cryptocurrency tax Fairness Act the bill is seeking to create a new minimum purchase point at which Bitcoin can be used as a currency without payment of capital gains taxes the bill introduced by Rep jared Polis Democrat from Colorado and Republican David Schweikert Republican from Arizona will provide a relief point for holders of digital currency and will create legislation similar to that already in place for foreign currencies to this part's interest so basically what this means is I kind of gave the pizza example earlier let's say I bought Bitcoin for a thousand dollars it's not worth ten thousand dollars I've seen nine thousand dollars in games right so if I were to cash that out through an exchange I would owe either short depending on short-term or long-term capital gains either 15% if I held it for over a year or 28% for shorter than a year so either 15% of nine grand or 28% of nine grand well what this law would do not cashing out through an exchange but just recently I bought a will do this just recently I bought a wetsuit right now I want to for any of you guys have noticed a surfboard and stuff I learned that there's Lake Michigan surfing I'm a huge fan you know spending time outside in the summer going to Lake and stuff I really got into paddle boarding this past summer so I bought a surfboard bought a wetsuit decided I'm gonna do some Lake Michigan surfing maybe I'll take you guys along with me one day I was actually kind of planning starting another video on this I'm getting a little bit sidetracked but my point being if I bought that wetsuit for three hundred dollars with my Bitcoin even if it's that same bit coordinate for a Granite's now worth nine grand I've seen a pretty good increase on that money but because I make a purchase of that wetsuit and it's under $300 I'm not required to report capital gains on that so what does this mean for you well this essentially means that you can spend your Bitcoin and live off your Bitcoin without paying taxes so if you want to cash it out of an exchange and get dollars you're gonna pay fifteen percent or twenty eight percent if you want to use it to buy your groceries to pay your electric bill to buy a wetsuit you're not gonna pay taxes on that point being you can live off your Bitcoin without paying taxes now this isn't currently the lives proposed this article was from September eighth I haven't really followed up on this law to see if it's gone through I'm really kind of surprised by this because generally the government doesn't do things that are are helpful or friendly or favor us and I could also kind of see this I don't know if it's being abused right like I know a lot of times people hate on Donald Trump and other people for like working within the tax code to avoid taxes like if you're working within the law you're allowed to avoid taxes you're not allowed to not pay taxes so if there's a law that says I can buy things for under six hundred bucks and not pay taxes you better believe I'm gonna buy things for under six hundred dollars and that pay taxes on them and I'm surprised the government with a lot of this because then wouldn't everybody just start living off their bitcoins instead of cashing them out here's the other part though because I I could see this being abused for purposes of this subsection all sales or exchanges which are part of the same transaction or a series of related transactions shall be treated as one sale or exchange so I'm not sure exactly what they mean by that or how detailed they'll go but I'm gonna give you an example so people wouldn't skirt this or whatever will say this wet suit cost five hundred dollars these wet suit booties cost two hundred dollars and this hood cost one hundred dollars now if I'm going to get equipment to go surfing normally I would probably go buy all these together right so five six seven or $800 I believe what this kind of subset the lie is saying and this would probably be more applied to business and things than me buying a wet suit but at least in the spirit of the law I'm not allowed to go into the store and buy this wet suit for 500 walk out the door come back in buy this for 200 walk out the door come back in and buy this for a hundred and and try to keep all the persons under there saying that scenario light kind purchases all my wetsuit equipment which was kind of intended to be purchased at one time I can't purposely split up into multiple transactions just to kind of take advantage of this loss so that's kind of really all I have for you guys today again I'm not a I'm not an accountant I'm not a financial adviser don't take this as financial or accounting advice this is just kind of my opinion it's the things I've researched if anything I said it has been if you disagree with anything if I misspoke on anything feel free to clarify or give your opinion or correction down in the comment section below just to kind of recap what we talked about I know this has been kind of a long video Bitcoin or cryptocurrency held for over a year taxed at 15% Bitcoin or cryptocurrency held for under a year short-term capital gain I'll link to this chart in the description box below so you can see where you're taxed on but you know probably somewhere around 25 to 33 percent way the benefit of taking profits when Bitcoin is high versus purposely waiting for over a year to cash out for lower tax rates don't be scared okay one other thing I wanted to touch on don't be scared to do training I was kind of head trading is very volatile right you can't lose money I wouldn't recommend anybody do margin trading or anything like that but even like swing trading like there's a lot of volatility in a coin in the past I was kind of scared to do too much trading something like this is gonna be just a show at the end of the year tax wise this past Thursday I bought a hundred light coins with this one like windows swinging up and down within about two hours those light coins were up three bucks I sold those so a hundred light coins three dollars made 300 bucks later in the day I set a very low limit order that I didn't think was gonna hit but it did a quick little kind of I shouldn't say slash crash will say flash crash for lack of a better word picked up some Bitcoin at 9500 Bitcoin has surged up to what I think over eleven thousand last night or this morning I'm probably gonna sell that maybe try to catch something else on a dip so now that I know there's programs like Bitcoin tax and others that will easily help me figure this out I'm not as hesitant to trade because I know I'll be able to figure out accurately what I owe at the end of the year so that was you know that's kind of helpful like-kind exchanges if you sell crypto for crypto it is a taxable event don't think because you go to tether that you're not gonna have to pay taxes on that transaction in terms of how to calculate capital gains first-in first-out seems to be the but if i want to say the only acceptable way but it seems to be the prudent way to go and keep an eye on this law about capital gains exceptions for purchases under $600 because that could really help yeah i think would be cool for two reasons a it would help a lot of us avoid so legally avoid some taxes and be it would encourage people to spend their bitcoins instead of just hoarding them right because i know a lot of people don't want to spend their bitcoins because bitcoin continues going up a lot of people don't want to cash out because then you got to pay taxes on it but if i could spend my bitcoins without incurring taxes I'm making money I'm getting my items for cheaper it encourages a Bitcoin economy and I think would actually spur the real economy as well because you'd have a lot of you know they always say you know most people spend the money they get through tax rebates and whatever else so people are gonna spend their crypto profits and that's gonna kind of in addition to helping the crypto economy probably spur the real economy as well so hopefully you guys enjoyed the video if so give it a thumbs up subscribe if you are not subscribed feel free to share this video on a Bitcoin forum or subreddit that you like or whatever and if you guys have any questions if there's anything I didn't address if there's anything I wasn't clear on feel free to drop a comment in the comment section below we recently crossed 70,000 subscribers guys thank you so much for that it's kind of slowed down a little bit but we're on the road to ten to a hundred thousand I'm hoping to get that silver play button sometime here soon so thank you guys again so much for everything I'll catch you guys on the next video

30 thoughts on “Bitcoin & Cryptocurrency Taxes in a Nut Shell | Capital Gains, Crypto Tax Fairness Act & More”

  1. if six nine was on wwe ——— dam he got hit on the face hes knockedout hes is on the floor
    3 2 1 and its allover his career its all over

  2. You can actually buy or sell bitcoins anonymously at https://www.furcoins.com irrespective of where you are and you get your bitcoins delivered to your wallet or your cash to your account without fail.

  3. I brought Coinbases debit card before i realized how unprofessional thee operations. Did i waste my ten bucks, or is it a wise money to keep it on the side for the tax law changes?

  4. Thanks awesome video. I recommend Cointracking for Cryptocurrency taxes. I saved 45% with the official link https://cointracking.info?ref=Discount1

  5. As I understand the new rules, there is an aspect of their desire to extract an ounce of flesh on every trade which will absolutely backfire on them, and show the usury, inflationary, counterfeiting fiat money bankster gangster cabal system for what it is …

    For instance, if you trade on Bittrex, on the exchange, every trade costs .25% of the total coin being traded. And there is no time between when the exchange happens between coins. You agree to a price, the exchange agrees, and facilitates the trade. Even if it takes a few minutes for the exchange to actually convert the coins, the price has already been agreed to.

    So regardless, and without exception, every single swap you do on an exchange is instant, and has NO CAPITAL GAIN … and because the fees MUST come out of the coins the Bankers Collection Agency (IRS) can call it a ham sandwich if they want. But in order for us tax slaves to comply, and show loss of coins for any reason, fees included, our ledger WILL ALWAYS be net loss of the fixed % of various exchanges, because the fees come out of the coins … and this doesn't get into Bitcoin and the stupid long confirmations, and astronomical fees …. the irony is delicious … ๐Ÿ™‚

  6. From justAnswer late 2017: 1) "Yes, long term and short term capital gains are taxed at different rates. The determine factor is how long you held the position. +/- 365 days from the day after you purchase.

    Short term capital gains are taxed at your ordinary income rate 10,15,25,33,35,39.6%

    Long term capital gains are taxed at 0,15,20%"

  7. I hope they change the law on this in the future. Capital Gains seems excessive for tax purposes and if you make millions in this i would shudder to think how much money you could potentially owe to the IRS.

  8. HELP ! I UNDERSTAND YOUR NOT AN ADVISOR!!!!!
    My question would be .
    Since Trump (Yes trump ) Signed the new tax law in 2017 ! I guess it goes in to effect on 2018 (Dec 31, 2017 Midnight)

    1)Would it be that my trades that I have done in the past 2017 and before . Do I have to pay for those transactions (get taxed) ?
    2)Would I be taxed for my first initial investment? Towards a Altcoin or Bitcoin?
    3) Do each trade I make, gets taxed ?
    4)Do I have to report to the IRS , if the law was signed for 2018 and up (similar to my first question).
    Anyone can help me please , if you need to add more information that would help and youโ€™ll probably help others .

  9. I'm just gonna treat it like any other gross income, on a quarterly basis as if I continued to work as I did for years..Wedding Photographer!!…only difference is I just raised my price very high in 2018 to explain my large possible amounts. Also I don't tax until it hits my U.S. Bank, this really doesn't have to be that difficult in my opionion…
    REPLY

  10. This information is outdated, since the new tax bill has declared that every trade is now a taxible event. Which is a complete nightmare.

  11. I'm curious. If I started with $1000 worth of ltc. Then day trade ltc, and reinvest the gains back into ltc and hodl for over a year. Let's say I gained $10k. Then cash out 3 years later, would I just pay long term capital gains tax on $9k?

  12. The thing that angers me the most about the whole "like-kind" exchange thing is that I do alot of trading in altcoins on various exchanges and 99.9% of the time its paired as Altcoin/BTC so I am forced to buy BTC and then buy the altcoin. Both of those are taxable events so each time I have to go USD>BTC>Altcoin to buy and Altcoin>BTC>USD to sell. Also they only let you declare gains/losses based on USD and not bitcoin, but what if I want to use bitcoin as my primary currency? Sometimes I make altcoin trades where the altcoin rises in USD value but BTC is also rising at a faster rate so when I cashout back into BTC I end up with more dollars but less BTC. I should be able to declare those as losses if I wish to transact in bitcoin.

    Also regarding capital gains taxes I am pretty sure if you fall in the lowest 2 tax brackets you pay 0% on long-term capital gains. Short-term is still taxed at the same rate as your income, but anything long term is 0% if you make under like 36k a year or 72k filing jointly.

  13. Federal long term cap gains tax goes up to 20% for top tax brackets, plus the state cap gains tax many people forget. In CA the state cap gain tax ranges from 9% to 13.3%, so combined with fed it can be as high as 33.3%.

  14. Thanks for the video. I dont know if you have any idea about other platforms that give out tax help like bitstamp? I did a bunch of trading but never thought that was going to be an issue until just the other day. Iโ€™m guessing I have to have thousands of trades sometimes those where minimal only like 5-10% on 200-800 depending on what Iโ€™m trading. Again thanks!

  15. Hey Rules For Rebels, thanks for the insightful video. On the issue of transferring cryptocurrencies from Coinbase to a hardware wallet counts as a sale according to the Coinbase report. If you held onto those cryptocurrencies, are you still responsible for reporting them as sales on your taxes. That issue still seems unclear to me. Thanks and keep up the great work!

  16. Why even tax ? Irs are criminals you should not support them, just make s transaction from one wallet to another and tell them they got stolen if they want you to pay

  17. What if you don't live in The US and are a resident of another country with much friendlier tax rules. ( no tax rules) This makes things very complicated.

  18. Thanks man this info nobody talk about and is valuable.
    Can you show the software and how you keep up with taxes, I mean can you make a vid of your system and how you do on a daily basis? But for dummies like me ๐Ÿ˜’
    If you can it'd be great u do one for e-commerce world and one for cryptocurrency world ๐Ÿค™

  19. Hold your coins with your private keys and don't pay. We are standing at a fork in the road of the birth of a new financial system. DO NOT allow yourself to be extorted by a parasite class robbing you of your income. The only way they can tax crypto is if you allow yourself to be taxed and self report. don't.

  20. Thanks sooooo much for doing these tax videos! I just barely got started a few weeks ago and have only bought small amount of BTC for small investments to get started in Bitconnect, Hexabot, Chain Group, USI Tech, etc. These are only growing literally by pennies and I haven't not made any withdrawals. I have not cashed out anything or realized any profits whatsoever and hope and pray I don't have to report any of this for 2017 taxes. I don't understand taxes at all and really also hate taxes, so PLEASE CONTINUE TO KEEP US UPDATED! Thank you so much!!!!!!

  21. Where did you find out about the fact GDAX incorrectly counts outgoing BTC transactions as a sale? That's interesting.

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