New Credit Karma Survey Shows Bitcoin Investors are Less Likely to File Tax Returns on Crypto Losses
A survey of 1000 people by Credit Karma, a U.S.based multinational personal finance company reveals that bitcoin investors are reluctant to report the losses they have incurred from trading cryptocurrencies because some are uncertain if there will be tax deductions, reports CNBC on January 30, 2019.
Cryptocurrency Holders Evading Tax
Based on reports, a survey of 1000 people revealed that half the respondents would not report the losses they have made while trading cryptocurrencies in 2018.
Thus, this has been used as a yardstick to determine the actions of the public as a whole. The results of the survey in question show that 53 percent of bitcoin investors in the U.S are willing to report their gains and losses to the IRS.
However, only 35 percent of those with realised losses plan on filing returns. According to Tyson Cross, a tax attorney who spoke with CNBC, 2018 was a bloodbath for the industry. However, taxpayers have been mandated to make a report of any sales of assets, and that includes cryptocurrencies.
Besides, there is no way for the IRS to determine if a trader had made gains or losses through their sales unless it is explicitly stated by the person on their tax form, Cross said.
Selva Ozelli, a tax and finance executive who also spoke with the media, said taxpayers who operate a Swiss bank account do not have to report to the IRS. As such, bitcoin investors may have assumed that the same logic applies to them.
Ozelli added that some people might have skipped making the report when gains were made and could, therefore, be nervous about filing a return on their losses. The media outlet, on the other hand, outlined that tax is usually imposed on virtual currencies, stocks, bonds etc. at your capital gains rate.
The rate is the difference between the cost of the asset when it was bought and when it was sold, and a 15 to 20 percent levy on the result obtained, said the report.
Also, CNBC was quick to note that people's reluctance can be attributed to their uncertainty if tax deductions will be made from these losses.
Crypto traders are unsure if they have to make returns in the first place.
Reportedly, the IRS who has clearly stated that tax returns must be filed is currently making attempts to ensure that people adhere to its policy. One of such ways is through the tracking of bitcoin transactions with the help of Chainalysis, a cryptocurrency company.
In the same vein, Kevin F. Sweeney, a former federal tax prosecutor stated that the IRS is gathering the records and resources that are required to fish out non-compliant taxpayers.