How The IRS Is Cracking Down On Cryptocurrency Holders
In the financial world cryptocurrency is all the buzz.
With so much talk you’d think everyone would be diving in for some of the unbelievable sounding rewards. The IRS seems to think everyone is, since for the past two years, they have begun targeting cryptocurrency users and companies. They want to make sure they are getting what they think they deserve or rather they are wanting to ensure that everyone reports their capital gains and losses properly.
According to an online service dedicated to educating readers about cryptocurrencies, “So far, it seems the average person on the street is still behind the curve in this regard. Whether that is intentional or not remains unclear at this time.”
The same article goes on to say that, “It appears the IRS has a multi-pronged plan of attack to ensure that tax reporting is conducted properly. It will continue to examine exchange records pertaining to American users and extract the necessary information from that data. Additionally, there will be more public outreach to users on how to properly file cryptocurrency-related tax reports in the years to come.”
Dabbling in Cryptocurrency
While the IRS and perhaps a majority of Americans are mesmerized by alternative digital currency, it seems the only thing it has taken over is the imagination as pointed out in an article at cnbc.com, “Less than 8% of Americans own cryptocurrencies.” The Article also stated that, “the market capitalization of all cryptocurrencies (below $400 billion) is less than half the market cap of one company: Apple, which has a market capitalization of more than $900 billion.”
So, if you are dabbling in the roller coaster cryptocurrency ride, and, if the value of what you have stored is $10,000 or more, it must be disclosed for tax purposes. If it is being held overseas, it must be disclosed in one’s Report of Foreign Bank and Financial Accounts (FBAR). Just something to keep in mind as more and more people are being seduced by the huge fluctuations. If you have questions about whether or not you need to file, give our office a call. The last thing you want is to owe the IRS more real money than you stand to gain in digital currency.