Hello Steemians,
2017 has brought a lot of new investors into the crypto space. Myself included, many looking for a quick buck without considering taxes may still apply because crypto is a digital asset and used to be considered a property. In the United States the IRS wants to apply some regulation to crypto and exchanges need to be complaint in order to operate or risk getting shutdown or even fined. Coinbase has been under pressure to give a lot of information of its users and had a partial victory, sadly this means early users might get back taxed. Those getting into crypto now are lucky, if we wanted to do taxes we have resources like https://bitcoin.tax and https://cointracking.info early users had to do their own tracking. It might be very hard to dig up old records not many keep records of shapeshift exchanges or evercoin coin swaps.
Image coursey of Bitcoin.tax
Last night I used bitcoin.tax to get my records together. They over a free service and premium tier of 30$ USD can buy the service with dollars, paypal, bitcoin or alt coins. I believe cointracking is more expensive and does similar services. Bitcoin.tax offers instructions how to get your purchase info, fees, trades from many popular exchanges. Bittrex was easy to get into a single record to import, instructions for coinbase was easy but had to be per asset. As an alternative bitcoin tax offers an API for coinbase to properly pull your asset information which is recommended and might prove to be more accurate. GDAX trades was also one API away but importing my trade history maxed out my free account. I needed the premium service to handle 1000 transactions. Sadly Exodus wallet has no way to make a nice report for bitcoin.tax, I sent a helpdesk ticket to the Exodus team and they suggested how to pull the developer features to retrieve my transaction history and shapeshift orders. It was up to me to make a CSV with all my transactions, selling LTC,BTC, ETH into other alt coins and the fee for each transaction. Shapeshift was a bit of a pain to retrieve and blockchain explorers were necessary for gas cost and selling trading ALT for ALT when using the website. It wasn't too terrible because once imported bitcoin.tax pulls all their USD market prices with the time stamps.
Since Mining and receiving crypto (even from lending) is considered a source of income bitcoin.tax offers a way to import that. Crypto with public ledgers its as easy as entering their public addresses and a report populates. However, ERC20 cryptos on the ethereum blockchain do not populate correctly if at all and thanks Nicehash for trashing my payout reports :\ luckily I had my own records from Nicehash. I’ve been mining zencash and had to make a csv of that to import. Pulling my transaction history from Swing wallet was easy, playing between Excel and Notepad++ to get the formatting just right… Not so much. For income we have to put the market value per payment but luckily bitcoin.tax did that for me with my timestamps.
How bad did crypto taxes hurt me? Well I’ve only been investing and mining for six months in 2017. I think I only have to pay 30$ USD in crypto taxes and 30$ for bitcoin.tax but its not impossible to work with and this tool can import from the previous year if needed. If can print out an official 8949, forms for turbotax and csvs for your record keeping. I think the big fear about crypto taxes is “Will I lose 60% of my earning?!” Well crypto taxes are targeting the big businesses and whales that made it big and not reporting it. Not the person that made a couple hundred in crypto. I believe crypto taxes are a necessary evil. Almost every country has crypto taxes. Atleast it’s only a one time event. It’s better to do taxes and IRS has to prove something. Than IRS audit and you have to prove innocence, especially if they’re going back 3-10 years. With resources like Chainanalysis, Oh yes they will be coming for you one day. If taxing crypto does anything it legitimises crypto and the governments of the world need to learn how to deal with it or get left behind. There are profits to be made, don’t be afraid of trading and yes there is a cheaper tax bracket if we hold our assets for longer than a year. Is it worth never investing before an asset if it one day zooms past the moon? We’ll only have to pay taxes once, the government can keep the fiat I am keeping my assets.
If anyone is going to purchase bitcoin.tax premium service please consider using my referral it will go a long way.
Do what feels right for you and what's best for your family and friends don’t lead them astray. Good luck everyone!