DON'T GET REKT – Crypto Taxes (Mining, Staking, AirDrops, Masternodes, etc..)

we're going live alright welcome back guys welcome to the show today we have a very special show because we have a very special guest we have crypt two tags girl on the line amazing to have you here Laura and today we'll be talking about taxes because I mean guys this is something you don't take seriously I've been telling you numerous times takes take taxes seriously and still you tell me hey Ivan you don't know the rules you don't know how it works so here with me I have Laura she's a CPA she knows what she's talking about since they will be talking all about airdrops about mining about staking about masternodes how taxes work in different cases and how you can get wrecked if you don't think about this properly so Laura amazing to have you here on the channel very welcome to the show so first of all first of all my first question to you what kind of misconceptions do people have about taxes because whenever I talk about taxes on my channel people like hey Ivan you know this is crypto there are no taxes in crypto why are you talking about taxes I'm not gonna pay any tax so what kind of misconceptions do we see people making in real life and our people ask okie and as confident they are with taxes in real life as they are on the Internet yeah I guess it's hard to say that question but cuz I don't know people tell me the truth but I guess you know common misconception is that you know everyone you know crypto is currency in our mind but in the IRS is mine is property so basically in their mind it's like a stock so if you consider it as you know currency only you're not used to paying tax on you know euros or USD or anything like that but you are used to paying tax on stock so you just need to basically shift your perspective and kind of see it like a stock for now I mean fingers crossed that one day I'll be treated like foreign currency or something different but as of right now it's stocks so we just have to comply by these rules it is like a stock and what kind of difference is that like if it was a currency versus as it is now it is now a stock and it's like a property so what kind of accounting differences is there and what kind of tax difference is there because it makes the world more complicated for us traders and for us holders so there's a a different set of tax laws around foreign currency and how the gains and losses work on those and if you just like go on a vacation to Europe and you get a bunch of euros you spend them and then you come back and maybe the USD to Euro ratio changes while you're on vacation you don't have to pay taxes on that it's not something that they tax because there's a law called the de minimis rule which means if it's under a certain threshold you don't have to pay taxes on it if I was like a foreign currency trader and I'm doing you know big sums of foreign currency then yes I would still have to pay taxes on the gains and loss but that's like a very specific set and there's different tax laws for that but then for crypto it's treated just like a stock so if you buy Bitcoin for a hundred bucks it goes up to even like a hundred and five dollars the next day and then you spend it there's a five dollar gain there and you're gonna have to report that tax so it's pretty annoying and I wish that they would have that de minimis rule but unfortunately that's just where we're at and so some people say that hey you know this is crypto no one's gonna find out like you need to worry about taxes but we see coinbase and we see Gemini's sending out forms to their customers so what exactly what kind of group collaboration is there between cryptic changes such as coin by coin basis and Gemini and the IRS and other tax authorities and is it true that you know crypto is invisible you don't need to worry about anything if you are in crypto no one will find out anything a common misconception I see on the Internet at least yeah well I mean that is one misconception because first off it's all on the blockchain so really like unless you think a specific privacy coin like that like a lot of times that I'm doing people's taxes I find and they like don't provide me their full information I just go on the blockchain and pull it all and I have their information and I'm like I know if I can do that you're gonna like yes you need to have some part of the puzzle like I can't just go look at the blockchain and know exactly what transactions are yours but if like you said coinbase and Jim and I they send out 1099 K's which those aren't forms that report you're like gains and losses they're not like a 1099 B that you might be familiar with if you have a stock but they are forms that basically signal to the IRS this person has crypto so if you've received one of these you'll receive it if you have over 200 transactions or over a certain threshold on coinbase or gemini in your total like USD going in and out so if that's the case then you're gonna get one of these forms and I wouldn't say that there's technically like cooperation between coinbase and IRS because they actually sued them and it was like this big lawsuit that went on forever and coinbase didn't want to give up their info but I think just the IRS targeted them because they're like you know a lot of people have used coinbase this is Annie oh no no no no no no no okay Laura's gone Laura's gone hopefully she will be back but while she's gone I will entertain you that is my job kind of here on the channel when guests are back or gone I need to entertain you and also I need to write to Laura simultaneously that she needs to come back here so I'm rising to to her here and hey you know you can see me try twice in the picture that is also how it is in these days when you know sometimes the gas just disappears whether it is connection whether it is you know something going wrong on their side and you know I need to do something about it like I need to I need to tell you some jokes I don't really have any jokes on top of my mind but this is kind of thing you need to be prepared like if any of you guys want to start a YouTube career you better be good at just spewing out information and the words and you know and just keeping your going on until the guests returns and that is kind of a skill you need to develop over time because it's not it's not easy like it's not easy to just be here with 300 plus people and you know just just talking about anything but I can tell you one thing the weather is pretty cold here in Stockholm it is so cold that it's minus six degrees and you see a lot of action going on when it comes to snow so hopefully we will have a good and mild winter but that is not a given fact that we will have that winter sometimes you know sometimes the winter here is really really awful in terms that there is no snow but there is just a lot of slush there is a lot of slash going on in on the streets and you just you just get so wet and in your feet and so anyway that that is the case so I hope Laurie return soon and let me know guess where you are watching from let me know guess where you are watching from so that we get some communication going and now Laura seems to be back Nick Walter yeah I don't know I'm not sure who Nikki maybe that's your colleague boyfriend but Laura is back now so yeah thank you that is good oh yeah so Laura next question when it comes to mining what kind of economic activity is that when I mine cryptocurrency and I get free Bitcoin because I give the network my computational power how do we account for that and what kind of taxes are there for my name right so mining is treated a little different than you know trading or any of these other things that were used to seeing mining is actually something that you can't ignore and you can't be like oh I don't know the tax laws are so confusing so I could never figure this out I'm just not gonna report it there's very specific tax laws the IRS has issued specifically exactly how you're supposed to treat it so they say that they've put out this notice in 2014 that says if you mind cryptocurrency whatever the value of the coin is on the day that you successfully mined it should be included as income on your tax return so yeah if you get like 0.01 Bitcoin and you know it's 300 bucks or 30 bucks however much it is you have to include that as income on your tax return but what is that really is it just income for work or what kind of you know service did I do how do you classify that because I mean you can say it like it's an IT service you know I provide IT service to the network and I get paid but in that sense there is no real customers to send an invoice to so how do you classify mining what kind of activity is that and what do you really get get paid for in the accounting terms yeah so in most likely most people use self-employment income so basically it's like you're just you're using your computers and other things that other assets that you have you putting them to work and then in return you're getting you know value back so it's considered self-employment income and so that's good you want to usually classify two self-employment income because even though you have to report the income you can also deduct the expenses so any computers you have if you have a portion of your house your electricity things like that you can deduct those against the income so hopefully they'll balance out and what about the air drops because in many cases you don't you might not even know that you have an air drop so how are you supposed to report air jobs that you might not even be aware of yeah air drops are kind of a weird one and there's no specific guidance about this but my kind of standard I usually you know explain to clients how it works but this is what I usually recommend is air drops yeah you can't really control and sometimes they just show up and you're like what the heck is this coin and you know it's not really something you ask for it's not something like in mining where you like are spending money to you know buy machinery and assets and other things to retrieve these coins they just literally show up and so my default is just to choose to assign a cost basis of zero dollars to every airdrop so that it just you don't get taxed on it's how you sell it so cuz most air drops to just they end up being worthless they're not really worth anything anyways but if they ever did end up being worth something you wouldn't pay tax on it till you sell it and so another thing that is very interesting is the fact that many people say that I don't have to pay taxes because I only trade crypto to crypto and also I'm gonna show people who watch the stream this article that a California student faces four hundred thousand crypto tax liability but he only has one hundred and twenty five thousand and the whole story here is that he had massive gains last year and at the end of the year he had massive gains in crypto he traded crypto to crypto and now in 2018 he's lost majority of his holdings because we have a bear market everything is going down but he is still liable for last year when he had massive gains and so many people say but he traded only crypto to crypto so can you explain just more exactly what happened and and why is he liable although he has not enough money how can you be you know how can all the IRS more than you actually have right yeah so I guess it's something to like kind of compare it to just to kind of you know wrap your head around this whole thing because it does seem kind of crazy but just imagine you had like a business or something and it was making tons of money tons of money in 2017 maybe it like around the holidays you know tons of people were making orders you were just making tons of money and then you just kept putting it back into the business back into the business trying to grow your brand and then the next year you're like business completely crashes and now you're still gonna have to pay the taxes on your business from the year before even though you have no money so I think this is just something that you know a lot of people are used to just working at a company receiving a w-2 their taxes get withhold withheld by the company just automatically so they never really thought about like intentionally going and paying taxes it's always just automatically withheld from them and so it sucks but I mean if you hopefully I mean you will now hopefully if you're listening for this you'll think about it and it sucks that you didn't know last year but if you are making $500,000 you need to think huh like I live in America we have to pay taxes with country like I should probably have to pay tax on this because if at the time he was you know setting aside cash well he was also making these huge gains then he would have been okay but like he said he didn't know that crypto to crypto was taxable thing that a lot of people didn't know and I'm trying to you know spread awareness and let people know that it is and it kind of sucks but just think like if you get a Bitcoin for $100 it goes up to $1,000 and then you buy eath with it and you buy a thousand dollars worth of eath you're being a thousand dollars worth of value for only $100 and then let's say your hold that II that a thousand dollars and it goes up to five thousand dollars and you buy five different alts for one thousand each again that's a four thousand dollar gain right there and it is kind of tricky for people to like wrap their heads around it but imagine if you didn't you would have to take that hundred dollars and then assign that as the cost basis to the eath and then you would have to take that split it five ways so $20 each between each altcoin and then you have to split it again and again and just keeping track of that cost basis would seriously almost be like impossible and so it sucks but like if you did that and then you had those alt coins and unless so those alt coins go to $10,000 and you sell them to USD yeah you're gonna have three like different steps of gains where if you s if you didn't record each game then you would have a nine thousand nine hundred dollar gain just from the Bitcoin to the alt and this is kind of like a confusing long sentence but yeah but but but so here's an important point that Bernard makes and this is a question that many people ask so what if he just left on exchange if you do not get US dollars they can piss off says Bernard but my understanding is that even if you leave on exchange you still need to pay your tax in the US dollars is that true or yes it is true so because you're receiving something worth of value because then now if you have a thousand dollars worth you can now buy more altcoins because you have more value and then you if you have these all coins you know you can do more with them and so you're creating more value even though you're not physically touching it and cashing out it would just it's the same thing if you had like Apple stock and then you wanted to convert it to Amazon stock a lot of people usually go to USD and then back in but if you technically we're gonna do a stock swap like that you would also have to pay tax people just aren't used to doing things like that and so it does seem new but really it's kind of been in the tax off forever right so next next up is masternodes what if I have some coins I stake them in the masternode or even if I just take them maybe it's not even a masternode I don't know if that makes it makes any different let's say let's take some coins and I get profit from that I get dividends what kind of tax rule applies so those actually are both treated the same as mining so like I said the tax law does specifically mention mining and it says in the tax law I have to pull up the wording exactly but says if you use mining or other computer resources to verify a ledger or blockchain which is what masternodes and staking you know these are all kind of doing like similar ish Singh's and so mass in my mind masternodes and staking also fall under the same categories mining so if you receive masternode or steak rewards whatever the value of those coins were on the day that you received them you'll just include them as income so we have also a question from sat satire saying that so we pay for unrealized gains but so you even krypter krypter you realize games it would that be a correct description of the situation there's a few different ways you can realize gains so maybe we just need to clarify the distinction between realized and unrealized so selling crypto to USD or any other fiat that's realized gains I'm still encrypted a crypto per the IRS that is realizing again and then also using crypto to purchase goods or services so I'm going pay you 100 bucks tomorrow because you did this great service for me that is also 100 you know dollars worth in Bitcoin that is also a taxable event things that are unrealized gains which would say let's say you bought a Bitcoin for a hundred bucks last year at the beginning of the year and by the end of the year it's worth like you know eighteen thousand dollars if you don't sell it it's just sitting in your account you haven't done anything with it you're just looking at it like oh look at that Bitcoin it's growing growing that's an unrealized gain so the IRS doesn't say you know everything that you're holding on December 31st whether you sold it or not we're gonna tax that if you're just sitting there it's not taxable so buying a coin is not a taxable event if you purchase crypto I could buy tons of crypto tomorrow I'm not paying any taxes on it until I realize again which is trading or all right you're back so if I just buy crypto and I hold it I do nothing with it there is no tax I need to pay at the end of the year but if I buy crypto and then I buy other crypt with that crypto that is a realized gain or if I use crypto to buy goods and services in real life that is a realized game or if I use crypto and then I sell it to USD or any other field that is also a realized game would that be a correct summary yes that's true so those are all taxable events there may or may not be a gain or a loss on each one so if I bought Bitcoin right now and then I guess that's an eighth and then like two seconds later turned around and bolts I'm not holding any other eath that's only if I have turn around and sell it I mean technically it's a taxable event but the value of the eath hasn't changed you know hopefully from one minute to the next dramatically so there's not going to be like a gain or loss there we have another question from digital waiking and I don't know how much you're familiar with blocking games but you have for example crypto kitties or the central and and in the future there might be even more blockchain games where you in the game do different things with your character maybe and that you actually use assets in the game that are worth money and so digital biking is saying that really looking forward to taxation on blockchain based games tax every move item crafting every interaction with the game is how it looks like right now like is it even if you play blushing games and you're like playing with your character and then you produce an item that is worth buy some real value that is a taxable event or not again there's no specific tax on this so I think it's kind of like a person-by-person basis we'd have to look at it but like for example like if you spent eath to buy like crypto kitties yeah that is like a taxable event if you were to receive it back again I'm like I'm hoping that we could just kind of do like everything that goes into the game and everything that goes out is taxed instead of each individual move because that's again like a lot of work if it is a cryptocurrency though then yeah technically that is how it should be taxed at this point hopefully it will evolve and the tax law will evolve as you know the IRS hopefully educates himself more about crypto but as of right now yeah that kind of is what it's like well another question from Jason asking do I need to be worried about sending Bitcoin from one of my own addresses to another and then the IRS thinks it is a realizable game that you know they don't trust you that it is your own address or whatever do you need to be worried no you don't need to be worried about that from my understanding the IRS is not technically in the blockchain right now looking through but they have hired companies to try and help them do that so we'll see how effective those companies end up being there's one called like chain analysis and some other ones that are trying to go through the blockchain and match up addresses with people but if you have documentation to support anything I think a lot of people are worried about a crypto audit but I'm like bring on a crypto audit like I want to see I want to be audited because I can provide them with literally like a 600 page document from my Excel printout that shows all my clients you know so if one of my clients gets audited like they're gonna be fine because I have like such detailed records on them and if I send that to the IRS most likely they'll look at that and be like this looks too confusing like everything was fine you're good to go and so I think it just gets tricky if you're just like I'll just put down a hundred bucks or a thousand bucks and then you maybe get out of it and they're like okay let's see the information to back this up well if you don't have information to back that up when you could get in trouble but I guess back to the original question is sending you know coins from one wallet to another is the asset and the owner so you know the type of crypto and the owner you stays consistent it's not a taxable event and so another question that I personally have that I've been thinking about is imagine the situation where I buy a lot of crypto like I invest a lot and it is quite you know quite important for me to have the script and then suddenly I lose my private keys and this is actually happened to a guy here on YouTube he unbalanced he was hacked like key and people people speculate that he wasn't really hacked that he hacked himself but you know from the from the point of view of the IRS you cannot really prove that you have lost your private key because you can remember your private key you can just say hey i lost my private key but you know you can just remember the the words in your head the phrase in your head and you can restore your wallet in another country or you know ten to ten years later so have you have you experienced this situation before because you know i understand that if you lose your your private key or you know god forbid something happens to your private key and you cannot access your crypto there is technically no way for you to prove it because it's always possible to just remember it yeah i think you know that's kind of like the crux of all this though like yes there's a lot of things either you can't prove the IRS can't prove if you really want to be shady with your reporting like most likely you're gonna do it anyways and it could also happen like you could just say like oh I had XYZ business and it fit so now I needed to duct all these losses like if you want to be dishonest and unethical like go ahead like you know I mean when people are honest like if you honestly imagine you have a lot of crypto and then you lose your private key so you know and then and then you cannot access your crypto and technically there is no what I mean is that technically is no way for you to prove that to the IRS because you can say I lost my private key I forgot my phrase but how do you prove that you forgot something you can't really prove it again I haven't seen that the IRS hasn't I haven't seen an audit yet so I don't know even like how detail don't end up getting in that but just to be honest like so on your own reporting if you knew that you lost your private key unfortunately you can only deduct the cost basis of it with the new 2018 tax law you cannot deduct so if you bought Bitcoin for a hundred bucks I went up to twenty thousand and then you lost it you only get it up to a hundred dollars you can't deduct 20 thousand so whatever the cost basis is of it that's what you can't deduct so basically you would just treat it as a sale for zero dollars so basically like it's worthless to me that would be the same thing like if you were supposed to do a token swap and you missed the opportunity and now your tokens worth nothing you know you could do a little swap for that and for zero dollars and you can deduct basically the cost of whatever you put into it not the current value but the cost and yes you may never be able to prove it I guess if you're audited we would have to kind of jump over that hurdle at that time but I think hopefully you know you can just if you're reporting everything else correctly I mean hopefully IRS will also agree but I'll have to see how they handle that what about losses we have the old banker in the chat asking our losses deductible yes of course so that is a huge thing for 2018 like right now but if you have any losses so let's say like you know early in the year like January February you know a lot of us know like bitcoin is kind of rising other currencies you might have made gains early in the year if you're still making them no good for you but I'm not and so if you have losses at this time or even if like we said you're just holding it so you have unrealized losses I would highly recommend selling your crypto at a loss or you know trading it at a loss just basically triggering that losses a realized loss so you can offset any of your gain so if you have $10,000 in gains from the beginning of the year do not pay tax on it this year just sell a few of your coins at a loss offset that completely and then you don't have to pay any tax and then even if you have an excess so maybe you're in a position where you're like yeah I had $10,000 in gains but now I have like thirty thousand dollars in losses so you have more losses than gains you can use those losses to offset those gains and then you can also deduct an excess of three thousand dollars in losses so in that case you would have you know $20,000 extra you would deduct three and then the extra 17,000 you would have to roll forward to the next year which means that your first $17,000 of gains next year would be completely tax-free and those are gains crypto from stock even from like rental properties anything like that if you have any sort of gains that are considered capital gains then you can use those to offset them so yes definitely deduct your losses if you're in a game position sell something right now so that you can get a loss before the end of the year and then hopefully you can avoid paying taxes in 2018 you still have to report it but you won't have to have tax paid that that is a pro tip for you guys right there and by the way smash the lights if you haven't absolutely do that because that this is top-notch information we have another question from the chat and this question is from Tyler and I guess Tyler is asking for a friend because he says the following if someone if someone did not pay taxes on buying and script or trades in 2017 basically if someone did not pay taxes last year what kind of penalty would they see if they paid in 2018 okay this is a question I get all the time a lot of people didn't report last year or in previous years and now they're kind of scared and not sure what to do my recommendation would be definitely to report it and I would report it without penalties and interest at this point so amend your return without the penalties and interest portion and then you'll send it in to the IRS you'll get back a letter saying hey you owe penalties yo you owe interest and then either come to me or another CPA or you guess do it yourself if you feel like you want to basically write back to the IRS and say oh you know I am just educating myself on this tax on now I didn't realize before that I had to pay crypto I'm now wanting to be compliant and going forward I will be compliant can I please request a one-time forgiveness of penalties and interest and this does not work all the time but I would say like maybe thirty percent of the time the IRS will say okay thank you for like you know coming to us basically like it's better for you to come to us than for us if they catch you they're not going to give you away penalties and interest and what kind of penalty is that is it sorry what kind of penalty is it penalty is half a percent per month on the remaining liability and then interest is it kinda depends it like changes over time depending on different rates but it's compounded daily it's about like five to seven percent account depends but it's compounded daily so that can definitely build up so if you do have this you know you can reach out to me or some other CPA I'm sure that can help you with it as well but I would definitely because if you're gonna if you're not going to port in 17 but then you decide to report in 18 it could raise questions and then if the IRS comes to you and then a lot it you know just all that mess could end up being like pretty messy so if you just try and get it like figure it out now it'll it'll probably be a lot better for you in the long run we have another question from fat zero asking is it possible for the government of countries where Kryptos are banned or unregulated to tax people for mining during the unregulated phase so it's not really about the US but and the I don't know if you are familiar with this topic but basically imagine that a country doesn't have any loss or you know it's just band or and didn't regulate crypto let's imagine the US had had this situation because I guess in the beginning when Bitcoin was created there wasn't any law for mining so if someone was mining back then and there wasn't any rules any guide guidance how does the tax work but in that way when you go backwards yeah so I guess the tax off remaining was put in place 2014 so if you've mined prior to that it is you know a question of what what should you do at this point because there was no tax law so tax law technically cannot be applied retroactively Lee it can only be applied from the point that it's created going forward in the US so in that case you're probably okay not to report what you received prior to that because also there's a thing called the statue of limitations which only extends three years back and so at that point were past the statue of limitations for those years prior to 2014 and so you the IRS could never come back and on you on those years even if they wanted the only time they could is if the amount of income that you made from mining was more than 20% of your total income for the year and if that was the case then they have six years technically to go back but I don't think that's something that they would really push or come back to you on because there was no tax law put into place at that time again you never really know but I would just make sure you know focus more on 2014 going forward but yeah kind of is a tricky situation especially I guess for people in other countries I would if you're in another country and listening to this I'm glad you love the US tax but I would probably talk to to a tax professional in your own country and see what their opinion is on that because I'm sure this is only us related obviously so if you live somewhere else ask your local professional but most people here are from the US so therefore we we were talking about the US law and you know just generally if you get educated on US law you can kind of you can kind of get the big picture how it normally works but it might be different to your country we have another question from coin collector asking about gifts he's saying what about gifts encrypt away for a tax free gift then that person gives back in cash for example a very clever scheme from coin collector but doesn't really work because I don't think people at the IRS or that stupid to say to say it simply okay so gifts so you can receive unlimited gifts so like Ivan if you want to give me a hundred thousand dollars I can get that completely tax-free I don't have to report it but I mean if I intentionally give you a gift that I then received back in dollars that is a simple scheme to see in that case but also so if that was the case too so if I decided to give it back to you um I can only gift $15,000 per year tax-free and so I would if I gave it back to you then basically I'm gonna have to pay tax on eighty-five thousand dollars worth of it where before I wouldn't have to pay tax and I think so it's like I don't want to get screwed from doing that so I'm not gonna help you do that the scheme because you can only yeah gift fifteen thousand dollars per year person right let's see guys keep asking questions in the chat and let's see if you have more questions if you gift your crypto to that receiver has to declare it as income is that true it sherry says that if you give your kripp to the receiver he needs to declare it as income it's not they don't have to declare this income and how it works so if you if you give to me to Bitcoin I don't have to declare the value of that Bitcoin is income the only time I would potentially be taxed on it is when I sell it so if you gifted it to me and then the same day I sell it what happens with the gift is that I inherit your cost basis and your holding period so if you bought it today gift it to me and then I sold it I could have the you know whatever crypto is worth today 3000 $4000 I can have $8,000 tax for you basically but if you bought it last year maybe a thousand dollars and then you gifted it to me and then I sold it for four thousand I'm gonna have a three thousand dollar game there because I inherit both your cost basis and your holding period right another instant question is about local Bitcoin because and this is a very sensitive topic here in Sweden because what happens is that sometimes people buy Bitcoin on local Bitcoin with cash and and then they do not have any proof that they actually spent that cash to buy Bitcoin and then when they sell that Bitcoin that they bought with cash on local Bitcoin the tax authorities here basically say you have no proof of your cost because there is like no real received with we don't take the receipt from local beacon we don't really know how much you spent on it so how is that in the US have you heard any any stories from local bitumen because here people have been you know getting in trouble for local based on tracing with cash so to me I don't know why that would be such a big deal cuz to me a lot of times I'll have clients who the same thing like I can't even it's like it's not that they even have it sometimes it's like I don't know exactly how much I pay for this I can't remember like because you don't have the records but if you look at someone's like like the blockchain or something you'll see also if I to Bitcoin I'm gonna see to Bitcoin coming into my wallet today so if two bitcoin came into my wallet today from local Bitcoin most likely I paid what the value of it was today like I'm not gonna pay someone ten thousand dollars today for a Bitcoin I'm only gonna pay them three thousand four thousand dollars and so yes maybe you don't have the exact like maybe is four thousand but really you paid four thousand and five or something like that ideally keep track of all of your records but if you don't I don't think it's too crazy to assume that you just paid the fair market value of whatever the coin was worth on that day and so finally I want to ask you about your clients just generally one kind of things do they miss is it that they forget to save their transactions or they you know they forget where they bought from what kind of you know tips and tricks five simple tips that people forget and that they need to think about when just doing crypt online trading or investing definitely first off yeah keep track of all your records so I would have a list of all exchanges that you've used and all wallets because a lot of times I'll ask my clients to send me a list of all the exchanges and all the wallets that they've used and they're like oh I just used coinbase and bye Nance I'm like oh really that's it like yeah that's it and then I go through and I'm like hey there's a hole here as a hole here as a hole here and like oh and then I use Jim and I want oh and then I had a treasure and then I had you know a legend out alike and so just write everything down so that you you don't forget it like sometimes my clients are like oh I forgot I had that treasure oh look I just found something great but um you know in general make sure that you have a list of all your exchanges and all your wallets that you've used because if you're able to put all that information together the accounting for it isn't too bad it's usually when you forget or you lose access to something that can really hurt you so if you lose access or other issues I guess is like with btc-e or mint pal or you know some of these ones where you can't access them anymore and so if you've lost all your records on that you know that that can be a big problem when it comes to accounting so there's things that we can do to try and recreate your records the best that we can with information that we have but in general it is pretty tricky so even if you're using like coin based something that you think is like pretty well established it's gonna be around for a while I would recommend like you know every quarter maybe or every six months or every month how we're often you feel like you can just download your records just so that you have them and maybe put them in a file and so then that way if anything gets lost like I've had some clients use btc-e its lost but then going oh but excel file that I downloaded like a long time ago and so then that like it's super helpful so if you have anything like that that would be the best the best way to put everything together so just be organized and then oh this is another big one if you were part of any icos write down the day that you sent the eath for the ICO and the day that you received the coin from the ICO and how much you received because a lot of that of my time searching through the blockchain is trying to match up payments for icos and what you ended up paying for them and when they came in and things like that I can just get really messy so just if you do anything just keep you know some sort of note to yourself some sort of record so that when you work with me or another accountant or if you ever audited you're like oh I have this information I have this information instead of being so disorganized you don't even know what's going on well can Bozek in the chat shout out he can and can ask so what if I don't pay taxes every one Bitcoin and IRS don't don't have the hey can go watch the beginning of the video like we talked about this like you need to take this seriously honestly and yeah he's of course asking for a friend as usual let's see I saw actually annexing question about okay I cannot find it but the person asked what what if I'm a foreign citizen and I have crypto gains since past years and then I moved to the US how does that work do I still need to tax on previous gains or so how capital gains work is their source based on your country of residence so if you are a resident of Switzerland and you will pay taxes if there's taxes on crypto in Switzerland according to the Swiss tax law but then if you become a resident of the US at the time that you established the u.s. residency then at that point you will pay us tax so basically it's you're subject to only the country so even if you're like maybe working a little bit in the US or you're a non-resident or you're here on a student B something if you're still a resident I've home country it's only gonna be taxed in your home country because that's how capital gains I guess our source is just based on your residency right let's see for everyone that's genuinely worried about taxes there is a new software company so people are recommending some software but what about the there are block chains trying to enable universal basic income like euros and mana would this be taxable to since it's since its scripted like this is the biggest misconception I see like people like would this be taxable to since its crypto but at the end of the day it doesn't really matter guess if it script or not it's all about if you gain value or not and if it's a taxable event even if it's up I'm not sure but 0 what you mean with the universe universal basic income but there are some Kryptos that basically give you you know free coins or interest on your coin but I guess that would be the same as staking yeah something yeah interests similar Forks and air drops again we don't have specific guidance so you can either choose to treat them as zero cost basis or cost basis equal to the value of the coin either way if you sell it within twelve months is treated the same either way if you're planning on holding it in that case that's when you kind of have to make the decision well we have seriously saying great guest Ivan Thanks so awesome guest so important thanks as Alan nice nice nice right Lauren I think we've covered a lot so what how can people find you if they want to get in touch if they want to learn about taxes I've included you our Twitter and your website on the stream but I mean what kind of services can you offer for people looking for tax help and how does it work how do they reach you yeah of course so basically I just say that I can help you as little or as much as you want so I can do just basic like a tax consultation 30 minutes you can all schedule that through my website and we can it's $49 we can just any question that you have about taxes cuz again this whole live stream is just you know tax knowledge but this is all very general like each person of course has their own sets of circumstances and though the general law is the same how it applies to you could be really different so if you want to schedule tax consultation and ask me any very specific questions we can do that and then I also help like 99% of my time is spent helping people create their crypto gain and loss reports it's basically taking all your records putting it together figuring out what you actually owe because that's just that's probably the biggest hassle when it comes to crypto is because if you're in stock like fidelity your Vanguard someone's gonna keep track of all this accounting for you but when it's crypto it's all on you which is kind of a big task so that's something that'll help people with or sometimes if people put their information together I'll just help them review it and if they just want me to kind of look over it quickly to make sure they're doing it correctly with those tax gain and loss reports we can also do a lot of like tax advisory like I was saying with like the year-end harvesting your losses or seeing if there's anything that you can do before December 31st in order to reduce your tax bill or do you need to make estimated tax payments all these different things I can kind of advise you that way and then of course preparing your tax return like you said I am a CPA so you know any whether you have crypto or not crypto I'm sure if you don't have crypto you're not listening to this but I can help you through tax return so basically just anything you need help with regarding crypt own taxes just let me know my emails just crypto tax girl at gmail or you can just tweet me DM e whatever you want and we'll try and get you you know figured out and I just really hope that people don't pay more tax and they need to so I'm here to try and it sucks that we have to pay it but let's try and pay like as little as possible awesome awesome Laura thank you so much and thank you all guys who have watched this guys and girls smash the like leave something in the comments if you have more questions leave those or just go to Laura website script – thanks girl comm schedule a consultation if you need that and I'll see you all very soon see you guys tomorrow have a great day and good bye and thanks Laura thanks for being here thank you for your time and good bye to you too

50 thoughts on “DON'T GET REKT – Crypto Taxes (Mining, Staking, AirDrops, Masternodes, etc..)”

  1. Is she high? She seems like she has not has breakfast and is replying questions to the best of her stoned ability… plus I want to see tax stuff in Sweden exclusively please, I don’t appreciate the whole world financially seeming to revolve around the states….
    Not trying to be a troll but I live in Sweden so the IRS can kiss my Swedish meatballs

  2. Question: so when you mine crypto, you get taxed. Then when you sell it for say USD, you get taxed on it again?

  3. What are you guys using to file for taxes? I'm getting a headache trying to synch all my accounts: exchanges, wallets, ICOs and OTC. Have you guys used ACCOINTING or something like that? Supposedly it helps you save on crypto taxes. Let me know.

  4. Love hearing from Laura and all her expertise. I'm in the business and she is the coolest CPA tax preparer ever! I would take her course only I don't do taxes, just the accounting portion of this for clients. But I get the accounting part, start an excel file to track purchase date, purchase #, purchase $, = total $$ bought. Another software that's good for tracking that besides excel is quicken.

    Googled that threshold for 1099-K form (you might get from coinbase). It's $20K, AND more than 200 transactions in one year.

    Glad that guy brought this to your attention. I hope he gets a great lawyer to challenge IRS ruling. Hopefully he can get on a payment plan, make a bunch more money, pay off the debt and pay taxes on the new income. Slower growth to wealth, but still awesome.

  5. Taxation and printing money by private organizations is illegal according to the US constitution, ie FED & IRS, yet WE get penalized, while WE do nothing, and the "Government" allows it. SMH When we the people quit bending over, we will all stop getting f*cked. The USA and constitution were created because of over taxation, among other things, yet here we are. Taxes are necessary but should be done legally. Taxes allow the people to have power over the government when voluntary, or government/private entities to have power over the people when forced. Which one are we in? hmmmm

  6. When she says to sell some crypto at a loss to realize the loss at 24:30. Does she mean you can just sell it for USD then just immediately buy it back again?

  7. Man, I wish I had made this video live. The ONE QUESTION you didn't answer is applications for USING crypto as a currency. What about when I buy a pizza with my crypto!? Do I need to pay taxes on the cost basis of the crypto to me or on the present (estimated) value of pizza?

  8. ‘.. But I can tell you one thing, it is pretty cold over here in Stockholm..’ true improvisation skills sir! 😂

  9. Imagine.. Something you own goes up in value,,, you now owe the government. … The government pays their lobbyist and buys more guns… … … … ….

  10. I think people are serious about not paying Bitcoin tax's… There are viable reasons to not pay tax's on Bitcoin. Maybe for security related tokens, but not all crypto will be taxable in the future. I honestly believe that people who pay all their taxes now will get jealous with all those who didn't. This will change dramatically.
    If you are futures trading – Taxable. If you are paper trading – taxable. If you Buy and hold Bitcoin, then buy something with it. NO TAX! NONE.. This would be government theft.

  11. The govt will not be able to audit all taxes now and u want to bring in cryptos haha they can't even count the voting ballots..i am gonna claim all my loses and this is gonna be a nightmare for you guys…u wanna play with us???

  12. you know, the entertaiment was cool, but you could use that moment to actualy give some background to the guys who are new to the channel, or a brief resume/explanation of what actualy she said up to that point, so to reinforce the point, in any case you do it good in that circumstance, but i think you could use that moment to do something usefull too.

    My opinion tho.

  13. informative video. All the crypto kids are anti tax online but they will grow up one day. We all do. You change the system from the inside. Tax clarity is what we need. With clarity we can make better decisions like utilizing realized losses appropriately.

  14. So when i want to buy coffee with bitcoin i must pay VAT and also capital gain tax. This has nothing to do with normal logic. Bitcoin is not a stock. Bitcoin is PAYMENT INSTRUMENT. You will see LOOOONG bearish market. New ordinary people will not invest in bitcoin, litecoin… and other PAYMENT INSTRUMENTS with this stupid taxation on PAYMENT INSTRUMENT.

  15. What about remote mining contracts? Can I write off the whole expense therefore bringing the taxable income to 0 assuming you are mining at a slight loss?

  16. #1 misconception: That evidence exists that proves that tax laws apply to someone. #2 misconception: A man has any natural authority over his fellow men. Misconception #3: Taxation is not extortion.

  17. Much appreciate Laura's breakdown on this… even she sees this as confusing and stupid herself lol.

    4:00 this is why I no longer use Coinbase, only to buy in with fiat then send it out to a wallet.

    The part where she mentioned that, if its under a certain threshold, you don't need to pay tax on it.

    I know from my accountant, if it's under 25k, they won't care or try to come after you… if it's over, then report it.

    20:53 Bam… that's what I'm doing.

    Tax is theft but, until we are in the position to really do something about it… be careful.

  18. Don't want to pay taxes… HODL. If you hold longer than 2 years, I believe you won't have to pay capital gains.

  19. I think this is great. People are becoming aware of how taxation is theft. Theft backed up with violence or threat of violence. Up until now, since companies pay half of your taxes, you don't realize how much you're being robbed. Now, you can see it.

  20. So do I have to pay for the brave browser tokens I recieved? They need to just do what others are doing and go tax free until all this is figured out.they are just making more work for themselves
    It's going to cost them more money to chase everyone down

  21. If you lose your private key but have some idea on the public key, if it still shows balance, there is your answer, its trapped.
    If a phishing attack steals it you might be able to track the transactions, if if looks like the coins explode like a dandelion you could prove someone sneaky did a job on you.

  22. Ivan, could be possible an exchange design a protocol that create automatically a separate the percentage taxable reservation fund inside the user account?

  23. FYI, since crypto is treated like stocks, you need to wait 30 days before you buy back what you sold at a loss, otherwise you cannot deduct the loss, as it is deemed a “wash sale". I am not a CPA, but have been investing in stocks for years…

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