Do You Have To Pay Taxes On Bitcoin? Is something that everyone wants to know has the bitcoin in their possession. So do you have or not to pay taxes on the bitcoin.
Well, there is no particular law regarding the taxation on bitcoin. But this not that simple because there is a variable factor which is leading it to be a taxation asset.
Bitcoin is the digital currency which was designed to replace the fiat currencies. Since the release of the bitcoin, there is a continuous increase in the price of the bitcoin. Many people have gained the profit by trading it.
Even though there is no particular law for bitcoin if you trade it there will be tax consequences.
Do You Have To Pay Taxes On Bitcoin?
The problem is people have no idea about the taxation on bitcoin. They do not pay any tax on the profit earned from the trading done on bitcoin. But they should understand that people have to pay tax on any profit earned from trading.
This question is something that can play a major role in the coming future. There are some of the factors discussed below which can help you understand the situation.
Under IRS radar
The U.S is one of the largest markets for the bitcoin currency. There are estimated 11.7 million users of the cryptocurrency in the U.S alone.
IRS maintains the track of the assets to track the holdings and tax obligations. But this does not happen in the case of the cryptocurrencies. The thing that is worrying the IRS is a large number of people are trading in the cryptocurrencies in huge amount. This has made difficult for the IRS to keep track of that money as it is exempted from the taxation law.
The U.S considers the cryptocurrency as a form of a property and on property taxes is imposed. So when you buy or sell a bitcoin for the profit. It means that you are trading your property which should be accounted for. So when you earn profit or face loss you should add to your account and give audit to the government.
It is very important for you to keep records of any trade. If you are investing in something and not keeping the records it can give you a lot of troubles in the future.
Bitcoin is one of the volatile currencies so it becomes even more important to keep a record of bitcoin trading. In this even if you face a loss you should keep the record of it. As this will help you to plan for the taxation and future endeavors in bitcoin.
Government point of view is different over the cryptocurrencies. As it can be traded by anonymously it can be used for money laundering or for other illicit activities. So they are trying to bring it under the surveillance or you can say to impose various laws. If this happens then it will not remain a decentralized currency and you have to give each and every account of trading.
From the above article Do You Have To Pay Taxes On Bitcoin? we can conclude some points. Even though there is no specific law regarding the paying taxes on bitcoin but you should.