CryptoTaxes – What you need to know about taxes on Bitcoin & Cryptocurrency

Nothing is certain but death and taxes. So I’ll start off by answering the elephant in the room… “Do I have to pay taxes on cryptocurrency trades?

Yes (probably).

If you sold any cryptocurrencies, and sold at a profit, then this is considered a taxable event by the IRS and most government taxation agencies. Buying “stuff” with Bitcoins, such as video games, exotic cars, or even other cryptocurrencies, is treated by the IRS as the sale of property, and not as an exchange of currencies. The benefits extended to traditional “forex” foreign money exchanges do not apply. As the IRS considers Bitcoin and other cryptocurrencies to be property, and not “currency” – which brings us to…

How long has the US government been taxing Bitcoin?

2014… in theory.

The IRS made it’s first formal statement on the matter of “virtual currency” in 2014. In their report, they mention Bitcoin by name, and classify virtual currencies as “Property” for taxation purposes.

In reality, very few people paid taxes on Crypto-gains until the past year. They estimate that fewer than 1000 people paid taxes on cryptocurrencies in past years (802 to be exact). This will likely change as Bitcoin now holds both greater public awareness and a much higher level of scrutiny by the IRS.

How can I avoid paying taxes on Cryptocurrency?

There are two (three?) common methods:

HODL – Buy & hold. The word, “HODL” is a slang term within the cryptocurrency world for long-term investors who buy and hold cryptocurrencies. It’s relevant here because many cryptocurrency owners, be it people who purchased cryptocurrency or who were given it as a gift, have yet to sell. If you bought Bitcoins for pennies back in 2011, and never got around to selling any, you are likely immune from any tax liabilities. Just hire a good accountant when you trade your Bitcoin for a Lambo.

Only take losses – Wear your string of “bad luck” with pride! If you failed to make any profit from your alt-coin day trading, it is likely that you don’t owe any money. Just like that time you short-sold a house for a 100k loss following the housing bubble burst, or investment in Pets.com stock you held until the day it was delisted (their sock puppet was cute). The good news is that your tax bill won’t be so high.

Hide your money from the IRS – If you want to feel like a modern day gangster, do what you can to hide your Crypto-earnings from the IRS. Before you ask, yes, this is illegal. Also note that most popular cryptocurrency exchanges, such as Coinbase, are subject to audits by the IRS. And Coinbase, in November 2017 (a time when Bitcoin was experiencing record numbers in price and trading volume), willingly turned over reports to the IRS on 14,355 of their users. With the boom in both price and popularity of Bitcoin and other cryptocurrencies in the past year, it’s unlikely that the IRS will let such transactions slide.

What if my accountant says I shouldn’t worry…?

Have you sold any cryptocurrency for a profit in the past year?

If so, I wouldn’t “worry” – but I’d likely seek out an accountant familiar with such issues. While there is much confusion over the extent to which cryptocurrencies may be taxed, it’s clear that the US (and most governments) treat any sale of cryptocurrency as a taxable event. With greatly increased enforcement efforts to tax cryptocurrency profits, it seems like the IRS has a different opinion than that of your accountant.

But I thought it was anonymous!

It’s not.

The nature of Bitcoin, and of most cryptocurrencies, is complete transparency. Any sale or exchange of cryptocurrency is tracked, publicly, along the blockchain. And for most cryptocurrency holders, significant information was required to set up accounts with Coinbase, Binance, and other popular cryptocurrency exchanges. And this information, including the name, address, and tax id of the account holder, can be given to the IRS upon request.

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Serial entrepreneur & experienced investor. 25 years of professional expertise. Specialties: Business Strategy, Investment Banking, Business Valuations, IP & Patent Valuations, Technical Marketing

5 Online Service Businesses you can start on $1,000 or less

Starting an online service business doesn’t need to cost the earth. With some dedication and a little bit of luck, you can start an online services business for as little as $1,000. Let’s look at five popular kinds of online service businesses you can launch with limited capital.

1. Event Planning

To become an event planner, you need little more than a website where people can book your time and a knowledge of your niche. It’s a wise idea to choose a specific kind of event that you help plan for, as this will allow you to differentiate yourself in the market. Whether it’s kids’ parties, weddings or business networking events, you need to make a name for yourself in one specific sector.

You’ll need to be able to source entertainment, refreshments and space for your events, but once this is organized, you’ll be able to include these in your prices and start turning a profit fast.

2. Online Tutoring

Got a college degree in Physics? Know a language that people the other side of the world want to learn? Have years of experience in a sector and can provide guidance and mentoring? Online tutoring is a great, low cost way of selling your expertise in a specific area. You need little more than a laptop and some lesson plans to get started and making money!

3. Copy Editing and Proof Reading

Whether it’s reports, brochures, whitepapers or guide books, there’s ever more companies producing ever more content. To make sure that content is well written and free of grammatical mistakes, many companies turn to copy editors and proof readers. If you can spot a spelling mistake a mile off – and proof copy fast and efficiently, your services will be in high demand. And, because you need nothing more than a computer (and maybe a printer) to get started, this is one of the cheapest businesses to start around.

4. IT Consulting

As businesses use technology more and more, the demand for friendly, efficient and knowledgeable IT consultants keeps on growing. Whether you’ve got experience installing hardware or are more comfortable migrating databases or coding applications, there’s an almost limitless number of companies who will need your help.

5. Virtual Assistant

Many companies have a range of jobs and pieces of work that their own employees don’t have the time or skills to do. Whether it’s chasing customers about invoices, managing their social media or data entry, if you have versatile office skills you can offer your customers a huge help – all you need is a website to get started.

Whatever your business idea, you need to make it easy for customers to book your services. Learn how you can do that in just seven minutes here!

5 trends for entrepreneurs in 2018

All too often, small business owners are so focused on the present that they fail to see big changes which could have a huge impact on their business. Being aware of what’s around the corner can help you adapt your business model and strategy for the coming evolutions.
Here are five entrepreneur trends which will likely affect your small business in 2018.

1. Massive growth in freelancing and self-employment

According to this Nasdaq article,

43% of the US workforce will be freelance or self-employed by 2020 – compared to 34% in 2017.

That’s a big leap, and so we can expect 2018 to be a major year for people starting their own businesses.

2. Growth in remote teams

As a corollary of the expansion in freelancing, we can also expect a huge growth in remote teams working for established companies. As an entrepreneur, you may well employ a number of full time staff in-house, yet the expansion in freelancers means you can also build remote teams of less permanent employees anywhere in the world, supported by cloud apps and email.

Read our review of Asana, one of the new generation of online task management tools for remote teams

3. Ever more workspace options

We’ve written before about the places freelancers can run their businesses outside of the home. However, in 2018, we expect the range and diversity of workspaces specifically designed for the needs of entrepreneurs to keep on growing. You can expect to find more offices with better deals as the market adapts to growth in demand from solopreneurs and start-ups for low cost and social workspaces.

4. LinkedIn up, Twitter down

It’s no secret that Twitter has struggled to monetize the platform for a long time, and we can expect the number of new users to continue its long term decline. On the other hand, after a massive injection of cash following Microsoft’s buyout, we can expect LinkedIn to keep on growing and become an ever more powerful platform for entrepreneurs and freelancers to find jobs.

5. Regulation of the freelance economy

From Uber to Upwork, we expect 2018 to be the year that regulators begin to play catch up with the gig economy. While for many freelancers, the opportunity to find work online is hugely beneficial, offering a tonne of flexibility and great work, it needs to be acknowledged that it does open some freelancers up to exploitation, poor working conditions and instability. So, we expect more regulations to emerge around the sector next year.

Reckon we’ve missed a major 2018 trend for small businesses? Leave your comments in the section below!