Cryptocurrency users are beginning to realize that no matter which part of the world they call home, the taxman has woken up to the fact that there is government revenue to be harvested from these digital assets.
Many countries are beginning to revise tax laws to incorporate cryptocurrency profits into end-of-year declarations. This is a time of confusion for many in the US as a lot of crypto dabblers and more serious investors are still not clear on how to go about filing tax returns which include cryptocurrency assets.
Local regulations may well differ, and for some making these calculations is best left to professionals. Node 40 is a company that has now moved to offer this support after seeing a gap in the market. Described as a QuickBooks for blockchain tokens, Perry Woodin’s and Sean Ryan’s company quickly realized that Node 40 was capable of filling what still amounts to an education gap in most people’s understanding of cryptocurrencies; how does one pay tax on them, and does one really need to? Although there might be confusion, regrettably there is no escape.
Node 40 software allows users to integrate their wallets and cryptocurrency exchanges used by them over the course of the tax year to calculate what needs to be reported. Woodin and Ryan argue it is worth knowing what is declarable to avoid strife further down the track, caused by a simple lack of the basic facts.
“If people are transacting in digital currency, it’s important that anyone understands that there’s a tax obligation on their part. Whether they’re paying their taxes or whether they’re day traders trying to make it big in the crypto world – it doesn’t matter. Any time you’re interacting with digital currency, it’s important that people understand there is a tax liability.”
Converting Bitcoin to goods or services or exchanging BTC to other cryptocurrencies could incur a tax. This is useful information with the IRS on the warpath, having warned of a coup this year. The main problem in filing a 2018 1099-K form according to Woodin and Ryan is for those that have made significant losses due to fall in cryptocurrency prices, they will need to balance declaring such losses to write off a tax liability with the risk of drawing annual scrutiny by the IRS, “…giving the tax authorities much better visibility of people’s crypto involvement.”
The state of Ohio’s announcement that it will now accept Bitcoin as well as fiat for payment of taxes has its own problems, according to Ryan, as it creates a federally taxable event for the user, who then has to consider whether they are saving enough in fees paying in Bitcoin to offset the obligations that might be created federally.
Woodin and Ryan maintain the IRS will get sharper as they adapt emerging technologies requiring their own discrete measures, but people would be a lot happier paying these taxes if they had an easier means to do so, one that cuts through all those complicated numbers, and saves all that confusion.
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