Cryptocurrency Investors Not Rushing to Fill in Feds Tax-Wise
If you were one of those big winners in cryptocurrency investing, then you’re likely on the end of some bad news now that mid-February is here: there are taxes on those gains. New reports from at least one tax preparer says that the whole idea of “taxes” isn’t showing up on a lot of filers’ radar, and that may prompt some auditing down the line.
The early word says that just a tiny speck of cryptocurrency investors—about .04 percent—are reporting cryptocurrency gains and losses to the IRS so far this year. Given that seven percent of Americans are currently estimated as holding at least one kind of cryptocurrency—and most of them likely either gained or lost—there should be more conversation than there is there.
Interestingly, according to word from Credit Karma, not even 100 people out of 250,000 filing have even mentioned cryptocurrency. Out of that tiny pool, just one person—not one percent, one single person—mentioned gains or losses big enough to be “significant.” Given that only 802 reported gains or losses from bitcoin trading in 2015, and the IRS subsequently sued Coinbase to get access to customer records, it’s a safe bet that a lot of declarations are just going unmade.
This may be a silver lining to all those folks who mortgaged their houses to buy bitcoin back around the $20,000 mark. Being able to declare a loss that is now somewhere around the equivalent of almost two-thirds of their home value might mean a pretty rosy refund picture.
Of course, there’s another point to consider, though I rush to admit I’m not a tax accountant and one should be consulted accordingly: HODL. It may be that people out there are thinking that they haven’t technically made or lost any money yet on cryptocurrencies because they haven’t cashed out, and likely won’t cash out until the currency in question is sufficiently valuable to be worth cashing out. That’s the warp and woof of the Hold On for Dear Life (HODL) philosophy.
So with this tax year coming and going, there likely are some people who cashed out and need to pay accordingly. But how many more are sitting on their crypto stashes, waiting for the rosy days predicted by the Winklevoss Twins or James Altucher?