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Crypto Taxes EXPLAINED! Bitcoin/Altcoins, Like-Kind Exchanges, Examples! (U.S. Specific Dec. 2017)

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DISCLAIMER: I AM NOT A TAX PROFESSIONAL, PLEASE DO YOUR OWN RESEARCH ON THIS IMPORTANT TOPIC! Many people have been wondering how their crypto transactions/dealings are going to fit into their taxes this upcoming tax season in the U.S. This is admittedly a very confusing topic that is likely going to be a huge hassle. I dove in and did some research on how our crypto/Bitcoin dealings are going to be taxed so I made this video to share my findings with you! Topics include: Like-kind exchanges, Capital gains, FIFO, LIFO, determining USD value, spreadsheet example of trading altcoins, and much more! If you find this helpful, I'd love to hear from you in the comments below and also get a LIKE/SUBSCRIBE! Previous Bitcoin taxes explainer video: https://youtu.be/-SvZWDl3wJ4 ******************************************** Hey everyone, thanks for watching. If you enjoyed this video please give me a LIKE and SUBSCRIBE to catch all my future content. If you have any questions definitely leave me a comment below and I’ll try my best to get back to you! Disclaimer: I am not an official investment advisor - everything I say is purely my opinion. Some of my videos are sponsored, those will be clearly marked by YouTube. If you’re dealing with a new process it’s always RECOMMENDED to try out the whole process end-to-end with a smaller amount before you move the bulk of it. If you want to sign up for various exchanges, you can use my referral code for bonuses. I use all of these exchanges and recommend them: Coinbase/GDAX: https://www.coinbase.com/join/5925a6f5f35ce600bcd082d2 Binance: https://www.binance.com/?ref=11165323 Kucoin: https://www.kucoin.com/#/?r=1KRQ5QR Changelly: https://changelly.com/?ref_id=38a4c94cf5c4 Also be sure to check out our communities: Facebook (Main Group): https://www.facebook.com/groups/cryptoforbeginners/ Facebook (Mining): https://www.facebook.com/groups/miningforbeginners/ Facebook (ICOs): https://www.facebook.com/groups/icoforbeginners/ Steemit: https://steemit.com/@btcforbeginners Instagram: https://www.instagram.com/btcforbeginners/ Twitter: https://twitter.com/btcforbeginners/ Intro Music Credits: ‘Soaring Intro A” Jay Man – OurMusicBox http://www.youtube.com/c/ourmusicbox
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Text Comments (366)
Dank Oxide (25 days ago)
Not paying lmao
qasion (1 month ago)
So I bought Alt coins in mid 2018, prices dropped, but I am still holding and probably keep holding till mid 2019, what is the case here, do I need to worry about taxes for this year 2018?
Bitcoin for Beginners (1 month ago)
Exchanging is a taxable event. It's like selling apple stock for usd then using that usd to buy Microsoft stock. That's per my understanding at least
qasion (1 month ago)
+Bitcoin for Beginners What about exchanging bitcoins to alt coins, though I am in the red on all of them :-) Like I said, holding till mid 2019?
Bitcoin for Beginners (1 month ago)
If you havent sold or traded then I don't think you need to do anything
Roc (4 months ago)
So if I buy some BTC to buy some other coin to hodl right away do I need to pay taxes??
Bitcoin for Beginners (4 months ago)
If the price of BTC didn't change at all between purchase and trade for altcoins then no
Gustavo Garcia Madrigal (5 months ago)
Thanks for for doing leg work
Bitcoin for Beginners (5 months ago)
My absolute pleasure, hope you check out some of our other crypto content too!
Nitish (5 months ago)
Let's say I bought 1 bitcoin at 10k$. Now I used that to buy some altcoin. If I make a 10x profit on the altcoin & sold it in less than a year, then I would be paying short term capital gains on that. But the 10x profit was in bitcoin. Let's say I got 10 bitcoins as profit. So do I have to pay tax on the bitcoin gains when I sell btc for USD? This essentially means that I could be paying tax twice on the same trade profit. Let's assume I sold the 10 btc at 10k as well.
2ndTim32 (6 months ago)
If you have gone from fiat to crypto, the a fraction of that to by another crypto and the a fraction of that to buy another crypto, you are screwed. You have to be a super computer / A.I to work such a thing out.
Bitcoin for Beginners (6 months ago)
Or use a paid software service that can track it for you :P
lanier1000 (7 months ago)
I can't do this. I'm just not smart enough.
SEO BCN (8 months ago)
:) CryptoTax.me is now available for sale.
James Kastner (8 months ago)
Thank you for the video. Question. So do you still have to pay on the gains in 1 fiscal year from each transaction even if you haven't cashed out or only when you decide to cash out
Kevin Kelly (8 months ago)
The whole point of this is to drive non institutional investors out of the crypto Market. The big news here is that we all must pay our gains to the govt even though they are UNREALIZED gains. Essentially pain the govt on credit while are crypto still Remains at risk. The government fears this Market as it takes away their source of revenues. Once again they're using the most feared and Powerful arm of the government the IRS to manipulate the people.
Arun A (8 months ago)
Please try our product https://www.bear.tax to calculate gain/loss gains easily
Roshan Abraham (9 months ago)
So I only put 500 dollars in cryptos. I haven't gained any money at all in fact i lost about 250 dollars. I'm 19 years old. Should I even bother filing my cryptos for taxes? Everyone's been telling me it's not enough money for the ira to come after me
Chris Bell (4 months ago)
Hi Roshan, if you're still holding the original $500 worth of crypto, you don't need to tell the IRS about it. You only need to tell them when you transfer it back into USD, whereby profiting or losing money that needs to be recorded. Don't listen to your friends when they say "it's too small for 'them' to come after you". There's no reason to commit fraud or tax aviation over something so small. I remember a movie quote once too, "We make too much money to go to jail" referring to making money in the stock market in strange ways. Submitting your tax forms with small profits and losses are what will keep "them" from coming after you for tax aviation. Remember, if you buy and hold a house an the value goes up or down, you don't report that to taxes until you sell it. Same thing with all investments, big or small, crypto or stock, house or bonds, etc. Hope that helps! Chris Bell - BELL Token
Hey thanks for the video. I have a question, if a send let's say BTC from my exchange account to my wallet do I have to declare something? I mean, I am not selling, nor swapping to any coin. Am I?
Chris Bell (4 months ago)
Hi Gisael, correct. BTC address 1 sent to BTC address 2 has nothing to do with selling. BTC to ETH or BTC to any altcoin is considered "selling" BTC and buying the altcoin. That's new in 2018. Hope that helps. Chris Bell BELL Token
apinder8610 (9 months ago)
Taxation is theft.
Leestarcpen (9 months ago)
How would this work on green card holder who has a citizenship from another country? How is wallet distinguished whether it is owned by US or my original country?
Garen1 (9 months ago)
Okay so let me be clear, i have been doing trading recently, and have made like $15.00 do i actually need to report that shit to the IRS and end up paying $200 so a “professional” to do my taxes??? Someone who knows please answer!
Bob Marslek (10 months ago)
According to my research from a CPA source....You do not pay taxes on Crypto...You pay taxes on Fiat "Realized" from the sale of crypto into Fiat, or any other personal property as capital gains.
Gujju Pappu (8 months ago)
Bob Marslek for 2017 like kind exchange is lije a loophole and i think that is what you are talking abt. for 2018 every trade is taxable for sure
NO NAME TV (10 months ago)
cryptocurrency is anonymous. ive never used my SS# not paying
Chris Bell (4 months ago)
Hi No Name, perhaps, you could create a wallet anonymously, and then accept bitcoins from a friend, in which you're correct, you'd be quite anonymous. The problem is when you have to sign up on an exchange online with all of your personal information, then send your bitcoins to your address and everything can be traced from the exchange to your address and to future addresses. Also, if you use a credit card online to buy bitcoins you'll be far less anonymous than you think. However, to remain secretive about it, simply avoid exchanges and using credit cards. Hope that helps! Chris Bell - BELL Token
Gujju Pappu (8 months ago)
NO NAME TV exchanges are centralized
Dr Bob Gregson (10 months ago)
Securely buy or sell bitcoins and other cryptocurrencies with no stress or fear at furcoins.com. That is where I trade bitcoins
VASLEE (10 months ago)
This is piss poor example you should of showed an example of what you would of owed from all these trades
raunak lakhwani (10 months ago)
Hi, I have made a lot of purchases in this month after 1st january 2018. I have sent everything to my friend overseas and he trades with that and gives me some commission. Can you please let me know about how do I file taxes in this case?
24MannyN (10 months ago)
Maybe this is a stupid question.. but what’s the point of putting your btc ratio and price of alt coin ? I missed where these two came into play whenever you did the math for your gains/loses 🧐
Laurence Whittam (10 months ago)
Hey Kevin, thanks for the information. I ended up going to bitcoin.tax where you can find crypto accountants/tax professionals. Ended up using Matt Metras in NY at bitcointaxes.me/ I am in numerous exchanges including international so it ended up getting too much to do it myself. He did a great job and is very knowledgeable on the crypto.
BillPA18052 (10 months ago)
Thanks, man!!
Laurence Whittam (10 months ago)
His email was [email protected] in case you want it.
Laurence Whittam (10 months ago)
As long as you know how to download the csv file from each of your exchanges it is pretty quick. Getting the work to him was pretty simple and then turnaround was about 2 weeks. Depends how busy he is getting now with tax season.
BillPA18052 (10 months ago)
Laurence Whittam thanks for your reply! How long was the process of getting it all done?
Laurence Whittam (10 months ago)
BillPA18052 he seemed well priced and it was pretty easy just sent him all my CSV files and he sorted it. I had a decent amount of transactions, did a lot of alt trading. It was good to get it in line for my tax return. This year I’m going to try keep track myself.
Armand Ricard (10 months ago)
Hi bitcoin for beginners, thanks a lot for this. I can't figure out how you get to the loss of -1591 for the last cell. Could you help me out please?
Armand Ricard (10 months ago)
Bitcoin for Beginners indeed, but when I do (0.16*12000)-(0.16*13300), I get a -208 loss
Bitcoin for Beginners (10 months ago)
I got a loss bc when I bought the price of LTC it was higher than when I sold it.
Chris Garrido (10 months ago)
What if we are on a foreign exchange will that help us avoid the tax man?
Rosy Hernandez (10 months ago)
Can you send me the excel spreadsheet =)
First Last (10 months ago)
Is there like a simple excel spread sheet someone can post so i can just plug my stuff in as i go?
Sujin Park (10 months ago)
Hi! Kevin. It s a nice Video! I have a question. What are the rules on sending as a gift from US ( I am a greencard holder, nota citizen ) to another country? to my relatives? or to my parents? Do I still pay tax on that? Do I still have to report? Do I have a limit?
Blake Whitney (11 months ago)
confused about BTC ratio vs Equivalent BTC. In the 6 ETH trade what does 0.075 represent? that 1 ETH is worth .075 BTC? so, 6 ETH is worth .45 BTC? what is the value in calculating this 0.45 number? Couldn't formula just use the ETH qty and BTC ratio? Such as (6*.075*$10,000)...etc ? Or is this just there for visual ease?
Blake Whitney (11 months ago)
Thanks for this video. Pretty much did the job of convincing me not to even consider high numbers of trades lol. Serious question though. What if you bought ETH for USD direct instead of BTC for USD and then ETH for BTC? That would just be a simple cost base. But if later you bought let's say altCoin1 for ETH and later some altCoin1 for BTC so now you have altCoin1 purchased using a mix of ETH and BTC. Then and at some point later traded altCoin1 for BTC. and then that BTC for USD to cash out. Do you have to somehow track what parts of your altCoin1 qty was from the original ETH/USD cost base and which was from BTC/USD?
Neo NovaStar (11 months ago)
Question, so if I do a coin to coin trade and made profits, but I dont cash it out to USD, I report it for year 2018 of the profits. Then 2 years later, I cash out my coins for year 2019, does that mean I would be paying taxes on the amount I initially invested in by 2x? I first paid taxes on the net profit for a coin to coin trade, then taxes again when I cash out in 2 years for a long term hold. That doesnt seem fair.
Cody's Mojo (11 months ago)
How are you handling the BTC price on days where the trade happened in the same day candle? I'm just in the beginning process of making my spreadsheet right now, before I get so many trades across so many exchanges it becomes a nightmare to deal with.
Chris (11 months ago)
So we have to cash out part of the crypto on each short trade?
Josef Venport (11 months ago)
I thought crypto was supposed to be private,,,so how the frack can the IRS even know about your transactions??
Bitcoin for Beginners (11 months ago)
Coinbase and blockchain analysis.
MJ ENERGY (11 months ago)
Great information and really appreciate your honesty and tech in the video. Day trading just gets harder and harder going over to the hodlers side, far less headache and it seems far more effective at this point. Buying and hodling, if it gets to a good price I will sell....
NYGUY (11 months ago)
Chill with all this just bring everything back to coinbase and only cash out through coinbase at the end of the year coinbase will send you a 1099 form very simple
Bitcoin for Beginners (11 months ago)
hmm dang it, I have my stuff split up though lol
Jack Belt (11 months ago)
If you buy a coin to immediately buy another coin to hold I think you're ok right? Because there was no gains is how I look at it.
Bitcoin for Beginners (11 months ago)
ahhh well yea if the coin didnt appreciate/depreciate in that time span i think you should be ok. BUT that's only if you claim Last In First Out to designate which of your coins you are using to make the trade.
Bling Sting (11 months ago)
what about reinvestments in bitconnect? each one taxable or just taxed on whole once cashed out
Bling Sting (11 months ago)
what about reinvestments in bitconnect? each one taxable or just taxed on whole once cashed out
Bling Sting (11 months ago)
what about new lends on bitconnect or reinvestments? are each of those taxable or just once cashing out
Bling Sting (11 months ago)
what about new lends on bitconnect or reinvestments? are each of those taxable or just once cashing out
Bling Sting (11 months ago)
what about new lends on bitconnect or reinvestments? are each of those taxable or just once cashing out
Jake D (11 months ago)
If I trade xrp for usd in Bitstamp temporarily just to buy xrp for a lower price, do I pay those taxes? Or do I pay it once the I have actually cashed usd to my bank account?
M Saindon (11 months ago)
Bitcoin.tax import and all done!
Gujju Pappu (8 months ago)
yes I agree, all they want is their money but they do not know shit how to regulate this thing LOL F***** thieves
BillPA18052 (8 months ago)
Gujju Pappu I don’t even think the IRS knows what is going on, as they have issued no guidance. Kinda like King Trump
Gujju Pappu (8 months ago)
cointracking is another platform. i wonder which one is better or accurate
Gujju Pappu (8 months ago)
how do you integrate those taxes into software like say H&R, does H&R accounts for deduction AFTER you add crypto taxes ?
BillPA18052 (10 months ago)
Can you get data from mining pools, mlm's, forks (like Bitcoin Cash) in addition to your exchanges?
Limbo (11 months ago)
Why do i report something that i havent actually gotten into my bank acckunt yet? What happens if i reported a gain after trading and a day affer that the altcoin i traded it with crashes to 0 dollars?????
This Here (11 months ago)
They dont even know what they are trying to tax.. they dont even understand wtf they are doing, Lots of fear mongering incoming 2018.
Vadim Tyutyunnik (11 months ago)
How I should pay taxes on Ponzy scheme? In case project disappear. IRS doesn't say what is crypto what is not. The use definition "similar to bitcoin" If we take a look at ripple it's opposite to bitcoin.( it's not decentralized and no limit of coins, actually it's even not a blockchain)
Bitcoin for Beginners (11 months ago)
You might be able to write it off as a loss
Cryto Farm (11 months ago)
Buy etheruim instead!
David Heinig (11 months ago)
theres no freedom in the USA TAXATION IS THEFT
Herakles (11 months ago)
this is crazy, im dont trading. I have so many transactions from nov 2017 to now, and i dont even day trade. Just sitting on what i have. Does anyone know, since the law was approved in 2017, is it applicable only for 2018, meaning in 2019 only we need to report?
Lance dtf (11 months ago)
I'll need a Chinese accountant. This is all Chinese math, it's like learning a new languish
Bitcoin for Beginners (11 months ago)
looool i feel ya
kmusic (11 months ago)
So it's doesn't recognize it not being a currency but treats is as property but not actual property when trading like for like am I the only one seeing this bullshit that the irs make up..They just trying to tax on everything...They don't on the internet!
TheIseethings (11 months ago)
lets save ive made $1000 on lite coin, how % tax do i pay. ltc vs usd. Whats the tax bracket? 15% or some are saying 40-50% including state + fed taxes.
Antonio Smalls (11 months ago)
I will bank outside the USA
stone cold (11 months ago)
Bitconnect records every transaction. Just give the spread sheet to a cpa or tax lawyer.
Ian Bonner (11 months ago)
Do transfer fees (send/receive BTC) figure into the calculations at all? Anyone have any luck with the tax programs mentioned?
george martin (11 months ago)
I have not researched this issue extensively, but I intend to report what I bought in 2017 and that I am holding it. This way I will have a definitive number as of 12-31-2017 that I do not intend to fool with. HOWEVER......when it was stated "First-in First-out" was used in the example, this did not make sense to me. The "first-in" cryptos, if you did well, would show much larger gains than the most recent ones purchased.....so my question is, "Will the IRS will let you choose the "Last-in First-out" methodology?" Under this scenario, there would be very little gains showing.....and possibly even losses. I would be happy to consistently do it that way........
george martin (11 months ago)
That is a very true statement, but in my case (small time trader), I pick something up on GDAX, and in a relatively short time, take it to Binance, and do that trade. So, I figure that I can get smacked for a 35% tax on, like five bucks, assuming what I have purchased did not shoot to the moon in five minutes of time. I want to isolate what I got in 2017, since I am looking at a longer time frame to hold. For me, I think this would be the cheapest possible way to go. Instead of paying a tax on something I had for a while (big increase in value), I'd rather pay more tax on something I just bought 5 minutes earlier that really didn't change in value.... On a side note, I did see a guy who did all his 2017 taxes like we will have to do them in 2018, because he didn't think the "like-for-like" covered Cryptos.....and his accountant agreed. He said it cost him more than he made at his job last year! I do not know how this will ultimately pan out, tax-wise....Imagine the guy using a trade-bot, doing a thousand transactions a day.....they'll have to cut down all the redwoods to document that...and will the IRS be hiring tens of thousands of compliance officers? Just a foolish tax decision this government has made....and it was made out of ignorance and proper study of the ramifications for the agency itself. But at least they have legitimized Cryptocurrency. Sorry to blather on...................
Bitcoin for Beginners (11 months ago)
But if you choose LIFO, they are no all short term capital gains, not long term capital gains (which is a lesser percentage). Something to consider.
Gabriela Robbins (11 months ago)
Thanks for your videos but I am really confused with that .. I am able to pay for each taxable event , but my question is , i haven’t gotten any of my profits yet (by selling my coins ) I just do exchanges from BTC to a different coin, so , what if at the end of the year I decide to sell all my cryptos and I realized that I didn’t get enough profits because the coins went down ( an example that I don’t want it happens ) , and I paid so much money to the IRS the actual year, and I realize That I didn’t get any profit but loss, will I get a tax return from IRS? That’s not fair , I thought you only pay taxes of your profits once you sell your cryptos . But why for every exchange ? A way to steal our money . So where I am going to get my money from? to pay those taxable events ? If I haven’t sold anything ???
Bitcoin for Beginners (11 months ago)
I think they'd want us to sell some in order to pay those taxes. But if you were at a loss then you would get that counted and potentially a higher refund if I understand it correctly.
Zhiang zu (11 months ago)
If you buy 1 btc and X coin is the same price then 1btc is now 3x higher but x coin is 2x and you made money you actually took a lost from the initial transfer from btc :) let’s see how the IRS handles that because it’s coming
David L (11 months ago)
2 questions here. First is will our trades we made in 2017 have to be reported or does it start in 2018? Second question, I make a ton of small trades each day some at little to no profit will I be screwed?
Bitcoin for Beginners (11 months ago)
Its for 2017 as well.
Bootroll ATV (11 months ago)
At a coin at a time, so I put how much have I’ve gained/loss. Price then price now... hold those gains on a note.... buy next coin... calculate those gains and losses.... from the already “taxed” profits from my last coin/token.... add the total gains up.. it kind of makes sense but please IRS send me a form saying what I owe out of total gains.... you’re a pain in the rear....
John Castorina (11 months ago)
What about mining?
Thomas Tennant (10 months ago)
Any thought as to how it's taxed? Am I taxed at each payout? Am I taxed only when the funds are actually back in my BTC wallet? On HashFlare they hold your BTC until you reach 0.05 BTC. Then and only then can you withdraw it and send it back to your BTC wallet. I'm also thinking the maintenance fee and upfront contract has to somehow come into play to actually figure out gain or loss. Would be interested in more specific information as it relates to cloud mining or mining with your own rig in a pool. Like the video, btw!
Bitcoin for Beginners (11 months ago)
it is taxable too
Bill Swearingen (11 months ago)
Hey thanks for making this video, it was very helpful. But please please please stop saying HODL. It cheapens Crypto Currency and makes it internet-childish.
Bitcoin for Beginners (11 months ago)
lol but its fun! :P
RR SS (11 months ago)
This is so messed up! Stupid country. Time to move out! Being American Doesn't benefit in any damn way! At least in Europe there are plenty of options to hook your wallet to debit card and use cash. No one cam keep track of that. Random wallets exist everywhere.
Bitcoin for Beginners (11 months ago)
Yea thats true...
d3f73 (11 months ago)
what happen if my account get hacked? or I lost my wallet? how they can tax something are not physical... nothing make sense..... look like its are desperate....
Bitcoin for Beginners (11 months ago)
if your wallet is lost or account is hacked you should be able to write it off as a loss
Rikaisun Li (11 months ago)
Thanks for the info#!
Bitcoin for Beginners (11 months ago)
my pleasure!
Merc 82 (11 months ago)
How does this affect mining? Would what I mined be considered a long term capital gain exactly one year after it is mined if I sell the amount that I mined 1 year after?
geo frijole (11 months ago)
Is buy and HODL some new internet lngo thing I get to learn today?? Whats up w/ HODL?
BluGyal (11 months ago)
it's old af. It just means hold on to your coins. Some people say it stands for H.old O.n for D.ear L.ife.
Bitcoin for Beginners (11 months ago)
geo frijole haha someone misspelled Hold a long time ago. And it really caught on. :P
richard lacey (11 months ago)
So basically everyone will get into debt because most people won't have this kind of money to pay these taxes unless they cash out?
richard lacey (9 months ago)
yusted1 Exactly
yusted1 (9 months ago)
And then theyll pay earnings tax because they cashed out. Its a double tax on the same money
Bitcoin for Beginners (11 months ago)
sounds like it...
Sanghyuk Park (11 months ago)
Video suggests BitcoinTax website for calculating tax. I paid $20 for unlimited and tried the website before coming and watching this video. Their calculation of my gain/net balance is completely wrong. It shows net balance, which is 5x times more than my actual balance. So be aware. Anyhow, thanks and TU for great video! I will be forwarding this video to another friend who asked me how to calculate.
Bitcoin for Beginners (11 months ago)
yay great to hear! and thanks for the heads up about Bitcoin Tax as well :)
Lino Munoz (11 months ago)
#FML ;-0
Bitcoin for Beginners (11 months ago)
looool
Symmetry Therapy (11 months ago)
This can be done after the fact, like a week after the trade?
Symmetry Therapy (11 months ago)
Thanks for the great video and extra help. Happiest New Year.
Bitcoin for Beginners (11 months ago)
umm yes i think the exchange gives you enough information for you to be able to look it up after the fact
Symmetry Therapy (11 months ago)
Accessing all the background info for taxable events.
Bitcoin for Beginners (11 months ago)
what part?
The Tragic Master (11 months ago)
I think Cointracking can help a bit with managing this mess, it does most of the math for you. There's a fee after 200 trades though. This entire situation is only a problem if you don't know what you are doing, so educate yourselves and you'll be fine. I think it's bullshit what their doing though. I think this is going to keep people from getting involve with crypto currencies which is a shame being that trading in this market (if you know what you're doing) can put a nice chunk of money in your actual wallet.
Bitcoin for Beginners (11 months ago)
yep, some of my friends already want to stop trading bc of this
Michael Treece (11 months ago)
So if I trade ETH for BTC on Binance which has its headquarters based in Shanghai, do I need to pay taxes on that trade if it "technically" was traded in China and also since it wasn't even traded for US currency? Sorry if that's a dumb question, I'm still a little confused on a few aspects of this ridiculous tax code
Bitcoin for Beginners (11 months ago)
yep it still counts even though it will be hard for the IRS to track for sure lol
Saul Goodman (11 months ago)
nobody got time to do all that math lol
Bitcoin for Beginners (11 months ago)
my pleasure!
Saul Goodman (11 months ago)
Might have to do that. ughh. Thanks for the informative video!
Bitcoin for Beginners (11 months ago)
looool a CPA does :P
Lucian 530 (11 months ago)
if daily Intrest counts then wouldn't that be the same as not withdrawing for a year then taking one withdraw and paying tax on all the earned Intrest at once
Will Smith (11 months ago)
Can u deduct the block chain fees. To.
Bitcoin for Beginners (11 months ago)
I think so, please verify with a crypto tax specialist though
Will Smith (11 months ago)
Curious how making a llc or s cord could help U got any. Info
Bitcoin for Beginners (11 months ago)
I do not but i think it can help.
Lucian 530 (11 months ago)
hi just wondering what taxes do I pay. I only use bitconnect for loans I don't make any withdrawls I just compound interest..although I would like to make 1 withdrawal per year
Bitcoin for Beginners (11 months ago)
I believe Bitconnect loans and daily interest counts but i may be wrong
yazz yazz (11 months ago)
wait so so i have currently 8,000 in a alt coin and the coin skyrockets and i end up turning my 8,000 into 100,000 -- would be nice but how much would i have to pay on something like that. i know for year and up (long term holds) can only be up to 24% from what i heard and short term is up to 39%. So say i take it out as a short term how much would i get taxed off that?
Joe Bartles (11 months ago)
Correct. The actual tax rate would depend on your tax bracket. If you hold the coin for more than one year, I believe the long term capital gains tax rate would apply which may be substantially lower. However, please double check all of this.
yazz yazz (11 months ago)
okay that is the max they can tax you though so it could be less than 39%
Joe Bartles (11 months ago)
If you bought the coin at $8,000 and sold within one year for $100,000, you would have a $92,000 taxable gain.  If your effective tax rate was 39%, you would owe about $36,000 in taxes.
Kenny (11 months ago)
i'm interested in this from a miners point of view.
Sherlock MacGyver (11 months ago)
It should also be nearly impossible for anyone to ever know you received a mined coin, right? Better to hide that and merely be taxed when you trade it. This whole thing is ridiculous, though.
Bitcoin for Beginners (11 months ago)
miners do have to report it as well i believe
Joe Lego (11 months ago)
Correct me if I’m wrong, but this applies for 2018 correct?
Joe Bartles (11 months ago)
Go to Google, type in "Bing" and bing it instead.
Chris Rice (11 months ago)
You can read the actual laws and not just rely on some misleading clickbait articles. Google is a thing.
Bitcoin for Beginners (11 months ago)
Joe LeGo nope, 2017 as well. I asked a tax professional but feel free to verify with another one :)
cmcdonough mcdonough (11 months ago)
There is no way to enforce like kind exchanges. Especially if using decentralized exchanges. Most alt coin exchanges have no info on a user's social security number.
Chris Rice (11 months ago)
I started in crypto 6 months ago and the 5 exchanges that I use all required a social security number and ID.
Bitcoin for Beginners (11 months ago)
yea it will be hard for sure
Critz1184 (11 months ago)
Do you even need to worry about reporting if you're under $20k ?
Bitcoin for Beginners (11 months ago)
I would, just to be safe. If you get millions a few years from now they might audit you for all the years in the past too. (up to statute of limitations)
Mad Dissident III (11 months ago)
I'm thinking it would be possible to set up an Excel spread sheet that can accurately track, and calculate all transactions for each year by programming data from the blockchains into the spread sheet cells, and then simply plugging in your wallet addresses...... If I can think this up, I'm certain that the IRS has already done it.
Bitcoin for Beginners (11 months ago)
yea they can do more complex blockchain analysis too
tellyaddict3 (11 months ago)
Damn, this is more like communism. I wonder when banging your wife will become a taxable event.
NK11ism (6 months ago)
tellyaddict3 lmao
antonm702 (8 months ago)
ive been paying to bang my wife for the past couple years...maybe she works for the tax man...jk guys just tryina bs around lol
Kevmaninc (11 months ago)
Spaceballs!
Bitcoin for Beginners (11 months ago)
looool
Daniel Clark (11 months ago)
tellyaddict3 lmao yes and breathing air
Mad Dissident III (11 months ago)
The problem with tracking crypto currency trading is two fold, due to the volatility, you would need to track the price of both currencies you are exchanging, if you buy bitcoin, and then a week later you trade for litecoin, you would need to factor in the price change in litecoin from the time you purchased the Bitcoin in order to calculate your gains/losses accurately..... Relative to the U.S dollar, the value of both crypto currencies in question are fluctuating independent of each other.... The first ones to get some software out there that can track, and calculate these transactions is gonna make a fuck ton of money!
F (10 months ago)
Mad Dissident III imma need a link brother
Mad Dissident III (10 months ago)
Fernando Rojas I did a little digging, and concluded that crypto currency trades don't count, what counts is how much you gain, or lose in USD (assuming you're using USD), that's all the tax man cares about.
F (10 months ago)
Yea like coin tracking
Joe Bartles (11 months ago)
Tax software for crypto already exists.  They use the transaction history from the exchanges you use.
mit p (11 months ago)
This is going to be a mess, half won't pay have can't be calculated and 98 percent don't care on this plateform.. its a mess..
Bitcoin for Beginners (11 months ago)
yea.... for sure
uhhhhNick (11 months ago)
What if i mine my own BTC? Do i only pay taxes once i withdraw the money through, say, Coinbase?
Joe Bartles (11 months ago)
Sherlock MacGyver that's not true. They will only tax you once when you mine the coin. No further taxes when you exchange into USD
Sherlock MacGyver (11 months ago)
Yeah, and then they'll double tax you when you change it out for actual dollars that you can actually spend on something real world.
Joe Bartles (11 months ago)
I assume you need to declare the BTC when received not when withdrawn via coinbase
Daniel Clark (11 months ago)
uhhhhNick if you mine its consider taxable income...mining is basically like working a regular job
Cryto Farm (11 months ago)
I would think it is like pay taxes for stock on the stock market!
Joe Bartles (11 months ago)
Sherlock MacGyver that depends on the exchange
Sherlock MacGyver (11 months ago)
Yeah, but your trades on an exchange can be tracked.
Joe Bartles (11 months ago)
This will drive an increase in privacy coins that cannot be tracked
Bitcoin for Beginners (11 months ago)
I dont think these taxes affect bitcoin in particular, more like crypto as a whole
Cryto Farm (11 months ago)
How you think how this can affect bitcoin prices? You think bitcoin is going down!
Francisco R (11 months ago)
We would only need to keep track if we do what you show in the spreadsheet in 2018, not in 2017 right?
Bitcoin for Beginners (11 months ago)
I think 2017 counts too. The new law was more like a clarification rather than a change is what Im told by tax professionals.
gene854 (11 months ago)
Good video, but how exactly do you figure out the cost basis for the BTC you used to buy an alt coin with?  This is a serious question.  The BTC used is an accumulation of BTC from many different sources, e.g. previous alt coin sales, transfer from other exchanges, purchase of BTC with new fiat, etc.  One alt coin sale that generates BTC may be split up into multiple different trades at different BTC amounts.  Also, each BTC accumulation is acquired at different USD prices. This is the real issue that nobody is addressing.  In addition to this, there is no gain or loss when cryptos are exchanged since they are of equal value at the time of the exchange.  https://www.youtube.com/watch?v=q5VCq3pX3ys
Joe Bartles (11 months ago)
Excel will become your new best friend!
Moon29 (11 months ago)
Do I report my 2017 trades?
Mike J Anthony (11 months ago)
Yes and No. If you converted any crypto into dollars in 2017, you report that only, just like it was real estate. This new law, reporting on ANY trade because cryptos are now intangible property, goes into affect as of Jan 1 2018.
WrittenInFilm (11 months ago)
Income tax was against the constitution before world war 2
WrittenInFilm (11 months ago)
You are correct, i researched more about it and realized i was infact 100% incorrect, thank you for clarifying that.
Chris Rice (11 months ago)
The 16th Amendment to the Constitution was ratified on February 3, 1913 and says: "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration." You couldn't be more wrong.
barry0gee (11 months ago)
If you go to a casino and win at one table or a machine then go to a another with your winnings you are not taxed until you cash out .crypto is a gamble and it can be lost or stollen and it has no value till you get it back to fiat currency .
Robert Faust (11 months ago)
That's because you are dealing with currency not property.
Chris Rice (11 months ago)
Fiat gains are not taxed as property but as earnings. Nobody expects you to pay taxes on every crypto trade at the moment it is made either.
Trey Sullivan (11 months ago)
And it's not till you withdraw it. Cause they want you to put the money you won back into another game lol
Trey Sullivan (11 months ago)
bnuttsgee that makes fucking sense.... Even online gambling like draftkings aren't taxed unless you win over a certain amount a year
Sungjae Pae (11 months ago)
what is tax rate?? iF I make 30k from bitcoin, how much percentage do i have to pay tax?
Joe Bartles (11 months ago)
Depends upon your total income level
Well, this work should at least be half-made already if ur a trader, since ur gotta calculate ur gains, otherwise ur totally lost. But most important, what will be the percentage of that cut?! will it still be worth it? Here in Brazil politicians are planning to just ban it, like China did, cause the government wanna have total control of ur money.
David Fernandez (11 months ago)
what if I am only 16, am I screwed?
Sherlock MacGyver (11 months ago)
Everyone is getting screwed
kenshingamer (11 months ago)
So then let's say I trade some btc for eth right now (Before Jan 1st), is my trade still considered a taxable evrnt that i have to report on my taxes in the next few months? Or do I only have to keep track of trades that happen in 2018 and onward?
superdacoolman (11 months ago)
It seems like any transaction. Is taxable. Not when you cash out from exchange to fiat into your bank account. If I send you crypto then that is a taxable event. If I send you crypto and it atomic swaps 2 times before it gets to you then each swap is a taxable event. So if I send you crypto with an atomic swaps that could be 4 taxable events. If you trade btc for ltc then that is taxable. I wish it was how you say.
DanielSanSensei (11 months ago)
These "taxable events" are calculated to estimate what you would need to pay if you converted your crypto back to USD before end of year, if you did so in the first place.
DanielSanSensei (11 months ago)
The key point here is that you pay USD to IRS based on "capital" gains when you "sell" for USD. If he sold items 1&2, circled in red in the video, for "USD" then he would pay that USD as calculated to IRS. Of course taking into consideration witholdings etc. If he sold all of the "taxable events" shown on his spread sheet for USD before end of year, then he would be liable to pay $6,421. However, if only a portion of his portfolio is sold for USD then only a portion of that $6,421 would need to be paid in USD to the IRS. This might make for a good follow up video. I'M NOT A CPA OR FINANCIAL ADVISER :-)"
Joe Bartles (11 months ago)
Its a grey zone subject to interpretation.  That is why they have now clarified it starting 2018.
Benevolent Essence (11 months ago)
Me too
Limbo (11 months ago)
If i traded ethereum to ripple what would be taxed on there if i hodl it? Im so confused because when u trade, the ethereum trading to ripple(for example) , how will there be a gain or loss there if im just going to convert ethereum to ripple and hodl it for 1 year or so?
george martin (11 months ago)
I believe that the taxable event would be the difference in price between when you purchased the Ethereum and when you converted it to Ripple. If the Ethereum was worth less when you exchanged it for the Ripple then that would be a LOSS to SUBTRACT. The taxes on Ripple would kick in only when you do something with that.
Joe Bartles (11 months ago)
The IRS views this as two separate transactions.  The first transaction is the sale of ETH for USD.  This creates either a gain or loss.  The gain would be taxable.  The second transaction is the purchase of XRP for USD.  This is not a taxable event until you trade or sell the XRP.

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