- Where to buy, sell and trade Bitcoin Cash in the US
- You will also need to file your taxes properly
- BCH Price Conditioned by the Nature of the Coin
- Refusing to report income is what they got Al Capone for
- Why Trade Bitcoin Options?
- How To Buy Bitcoin in the USA - Best US Bitcoin Exchange for 2019!
- Converting Bitcoin Cash to USD for Your Benefits
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- A beginner’s guide to buying, selling and trading Bitcoin Cash in the US.
Where to buy, sell and trade Bitcoin Cash in the US
You will also need to file your taxes properly
The IRS and state will view this as a sale of a security. Any capital gain must be reported on your taxes, i.e.
your normal Form 1040 that you file before April 15.
You'll need to add Schedule D to your tax forms.
Also, if this is a significant surge of income (e.g.
BCH Price Conditioned by the Nature of the Coin
more than a whole paycheck), you may need to prepay withholding in that quarter, with one of the coupons in Form 1040-ES.
For best advantage, you need to be able to state the date you obtained the Bitcoin, the USD cash value you paid for it (cost basis), the date you sold and the cash value you got. If you bought the Bitcoin in several batches, then each batch is a separate "lot" requiring a separate line item.*
That is because you pay very different tax rates on securities you held more than a year vs less than a year.
Refusing to report income is what they got Al Capone for
So you have to report the capital gains, or it's tax fraud.
Why Trade Bitcoin Options?
If you don't have all the info, well, if you don't have records of your cost basis, then you report cost basis of 0 and pay tax on the entire sale amount. If you don't have records of the purchase dates, then you put "unknown" and report it as a short term capital gain, at the much higher tax rate.
This applies to each tax lot individually. So if 4 tax lots made money and 7 lost money, you must report the 4 that made money.
It is not essential to report capital losses, but you waste an advantage if you do not; it would be like throwing away 10-33% of the losses. Capital losses can offset (pay the taxes for) future capital gains, plus $3000 of regular income, and if you don't have enough capital gains this year, they can be carried forward to a future year when you do.
Tax lot example.
Suppose you bought 3 BTC on January 2018 and 1 BTC on July 2018.
You sell 1 BTC on February 2019 and 3 BTC on December 2019. Which is which?
How To Buy Bitcoin in the USA - Best US Bitcoin Exchange for 2019!
- You can call that 2 tax lots, but the 1 BTC transaction only holds the Bitcoin for 7 months, so you pay the higher short term capital gains tax rate.
- Or you can handle it FIFO, and then you get 3 tax lots: 1 BTC for 13 months, 2 BTC for 23 months and 1 BTC for 17 months. More complicated, but all long term capital gains.
Capital loss example.
Converting Bitcoin Cash to USD for Your Benefits
Suppose you got creamed in DogeCoin in 2017, suffered a $20,000 loss, never reported it on your taxes, but still have the docs. Suddenly you realize. So you
- amend your 2017 taxes to take that capital loss of $20,000.
You didn't have any other capital gains that year, so you deduct $3000 off your income, reducing your 2016 tax, and roll the $17,000 loss to 2018.
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IRS sends you about a $650 check, with interest.
- amend your 2018 taxes, ditto ditto $14,000.
- ditto ditto all your state taxes.
- In 2019 you have $12,000 of gains on your Bitcoin sale. The $14,000 wipes out your $12,000 gains, so you pay no tax on them (you paid the tax in 2017). And you take the remaining $2000 off general income.
- No tax on the BTC sale, and 4 checks show up totaling nearly $2000.
A beginner’s guide to buying, selling and trading Bitcoin Cash in the US.
Not bad! I love the 1040X!