This may be one of the toughest questions facing cryptocurrency investors right now. If you’ve made money with cryptocurrency, do you owe tax on the profit? The simple answer is yes, you probably do owe tax on money you made with cryptocurrency. The profit potential from investing in Bitcoin, Ethereum, Dogecoin and other popular cryptocurrencies is staggering. There are certainly ups and downs, but many investors have made significant profits. And that has tax implications.
Avoid Landing in Hot Water with the IRS
For years, the IRS seemed uncertain how to tax the gains from investing in cryptocurrencies, or even how to calculate virtual profits. But now the IRS has rules in place, and if you’ve made money with these investments, you’ll be expected to pay tax on money you made with crytocurrency.
For instance, the IRS is now obtaining data from major cryptocurrencies exchanges and taking note of investors’ holdings and profits. If you’ve purchased a large amount of Bitcoin or another cryptocurrency or made a significant amount of money from these investments, you may receive a letter from the IRS. However, we highly recommend that you not wait to hear from the IRS.
At Tax Resolution Group in Sarasota, FL, we can help you determine whether you owe tax on money you made from cryptocurrency. And then we can help you develop a plan for you to pay what you owe. If you already have tax troubles or owe more than $10k to the IRS or your state but can’t pay in full, we can help. We help people find tax relief, file past tax returns, and sometimes settle tax debt for a fraction of what they owe. Contact us today to Request a Free Consultation.
Tax Rules for Cryptocurrency
Taxation for cryptocurrencies has been vague and confusing. Even the IRS itself issued a number of different rulings. The lack of clarity has resulted in many cryptocurrency investors avoiding the whole thing. However, while many investors did not thonk they were required to report their holdings to the IRS, they were wrong. Cryptocurrency purchases are not anonymous. As a result, if you hold cryptocurrency or have profited in the past, you are required to report those holdings and profits.
Estimate Your Gains from Cryptocurrency
The rules regarding cryptocurrency profits are complicated, but you’ll need to start by estimating how much money you have made. You made need to go back through your online records, purchase and sales to gather as much data as you can. Most major exchanges keep records, so your cryptocurrency exchange may have all the information you need. Once you have this information, you can start to estimate whether you owe taxes on money you made with cryptocurrency – and how much.
Contact Us for Cryptocurrency Tax Relief
It is easy to make a mistake with tax calculations, even when it isn’t with something relatively new like cryptocurrency. The current IRS tax treatment of virtual assets like Bitcoin, Ethereum, Dogecoin and other cryptocurrencies is still evolving. Avoid getting into tax trouble and owing penalties and interest to the IRS by working with a tax resolution expert at Tax Resolution Group.
If you have outstanding tax debt and owe money to the IRS, contact Tax Resolution Group today. Tax Resolution Group specializes in fixing tax problems. We offer proactive tax services including tax resolution, tax planning, tax preparation and audit support. We offer in person, virtual service or socially distanced service, and we are ready to help you. Call us for tax help today at 941-413-2799 or Request a Free Consultation.