As the tax deadline draws closer, crypto investors will need to review their losses and gains related to their Bitcoin and altcoin holdings, and determine if they are required to report them on their taxes.
However, according to a recent Twitter poll, the vast majority of crypto investors are refusing to report their taxes, and are willing to risk stiff penalties should the Internal Revenue Service (IRS) discover the unreported earnings.
Crypto Investors Say “No Chance” to Reporting Taxes
This coming Monday is the tax deadline in the United States, a time when procrastinators scramble to the post office in hopes of getting their last minute tax reporting time-stamped before the deadline has passed.
According to a new poll shared on Twitter by crypto-focused Youtube personality Crypto Wendy O, crypto investors are refusing to report their crypto taxes. The poll revealed that 81% of all respondents replied with “not a chance” when asking what the status of their crypto taxes were.
5% said they “will start next week”, which is the day the deadline is up, while 15% of crypto investors reveal they are “currently doing them.” The poll strangely omits an option for crypto investors who have already completed their tax returns.
Following last year’s bear market, many investors in Bitcoin and other cryptocurrencies may have more realized losses than gains, however, taxpayers are still required to report any losses on capital asset transactions that they made within the tax year, regardless if it was a gain or not. Failing to properly report taxes can lead to penalties or jail time.
Bitcoin Taxes Don’t Need To Be Difficult, There’s No Excuse Not to Report
Crypto investing is already risky due to it being an emerging market and a technology that isn’t yet fully utilized at scale, but avoiding paying taxes is outright playing with fire. Exchanges are actively working with the IRS to supply customer data, which can and will be used to compare against reported earnings or losses. Those that fail to report properly are at risk of an audit, or worse.
Related Reading | Confusing U.S. Tax Laws Lead to $5 Billion In Unrealized Crypto Losses
Reporting your crypto taxes doesn’t have to be difficult. There are many different services out there, including Bitcoin.tax, which automatically pulls exchange API data to programmatically calculate capital gains and losses, and spits out all the appropriate tax forms.
I’ve been getting a lot of last-minute DMs about entering crypto in Turbo Tax.
When reporting crypto gains and losses usually don’t list every trade. Instead I just list the total gain/loss per coin (separated out for long/short).
Here’s an example of how you would enter BTC: pic.twitter.com/ofl4cb1CMq
— Crypto Tax Girl (@CryptoTaxGirl) April 12, 2019
Turbo Tax, and others have also begun offering solutions for investors and traders to report accurately.
If you’re filing your taxes last minute and are realizing that you still need more time to calculate your crypto gains and losses, go ahead and file an extension and then reach out to me after the 15th and I can help ya!
(Or if it’s urgent, go to https://t.co/TNNG6AOPSf)
— Crypto Tax Girl (@CryptoTaxGirl) April 11, 2019
Investors with hundreds of trades may find themselves overwhelmed, but as CryptoTaxGirl points out, total gains and losses per coins are enough to report – not every single trade is needed. Finally, she reminds everyone that may need more time, or have second thoughts about not reporting their cryptocurrency taxes, can file for an extension to allow for more time.
Featured image from Shutterstock