Cryptocurrencies have become the newest “get rich quick scheme” as millions of people across the globe have entered the market, looking to make a sizeable profit. However, one concern that many have had is how to record and file this boon for tax purposes.
The total amount that taxpayers earned in 2018 is estimated at about $500 billion, clearly enough to interest lawmakers who are always on the prowl for additional tax revenue to spend on frivolous programs.
Some have already been reporting their digital currency for the purposes of paying taxes, but a recent report has found that those filing in the first month of 2019 have seen a sizable decrease in the value of their cryptocurrencies as compared to that of the same period in 2018. According to the report, those reporting losses from their crypto investment soared to 521% in comparison to those who saw a loss in their digital currency value from the previous year.
According to filings with the Internal Revenue Service (IRS), a larger number of investors reported short-term losses on their federal income tax return in the first month period in which they were able to file. The same does not appear to be true for those who are making long-term investments, as the filings show that they are faring much better.
In comparing the numbers, those reporting short-term gains saw a decrease from $1,689 on their 2018 returns to $1,568 on the 2019 filings. However, those reporting long-term crypto gains report a 35% increase over the last year, with the average value coming in at $15,352.
According to Credit Karma Tax services, the numbers clearly indicate that the number of people involved in digital currency investments has risen sharply. Yet, the company also indicates that 53% of Americans were not intending to report their gains or losses related to digital currencies.
Both of these revelations appear to be bad news for the United States government. Discovering that investors gains have decreased as well as knowing that more than half of Americans will be unlikely to report their digital currency investment should be disturbing news to those who were seeing this as the perfect source of additional revenue.
While it is likely that more regulations will be implemented soon to force people to declare their digital currency on their tax filings, how that will be enforced should be interesting to see, since many crypto accounts are anonymous to governments and financial institutions.
New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.