Today Investopedia reported that US tax filers may not be reporting their cryptocurrency gains. The tax preparation branch of Credit Karma has said that less than 0.04% of the tax returns that they have filed so far this year have contained any indication of cryptocurrency profits. Although they have no idea how many of their clients actually sold cryptocurrency in 2017, this tiny percentage is a little unexpected. Statistically speaking, it is assumed that more than 0.04% of Americans own cryptocurrency and many of them may have sold during the run-up in prices at the end of last year.
The IRS stated in 2014 that cryptocurrency is considered investment “property“ and, as such, any gains or losses of that property must be reported each year on an individual’s tax return. The number reported today by Credit Karma is roughly the same as the official number reported in 2015 by the IRS. Given the much higher interest in cryptocurrencies in the 2017 tax year than in the 2014 tax year, it is very surprising that more people would not have had cryptocurrency taxable events this past year.
It has been surmised that perhaps cryptocurrency holders who had taxable events last year may be waiting to filing for several reasons:
- They may not be sure how to properly file their tax returns with cryptocurrency gains.
- They may plan to file an extension and report the gains after April 15th.
- They may not even be aware of their tax responsibility under the IRS requirements
- They may plan to intentionally evade their tax responsibility in the assumption or hope that the IRS will never catch them. If they earned enough last year (and some people made millions) then some of these new millionaires may even plan to leave the country.
Will you be reporting your cryptocurrency gains?
Read the full Investopedia article here
