Cryptocurrency owners have been grappling with ways to accurately report their earnings to the U.S. Internal Revenue Service (IRS). With the pressure from the IRS on bitcoin owners to come clean with their earnings, there are suggested ways that individuals can avoid getting on the bad side of the law. IRS Keen on Bitcoin Tax Compliance
According to an article by the Ohio County Journal on December 4, 2019, there are ways in which individuals who own crypto can abide by the IRS crypto tax laws to avoid incurring unknown debts. The crypto guidelines released in 2014 classified virtual currency as “property”, which means that the property laws in the U.S. apply to digital currency.
However, U.S. bitcoin owners did not find the 2014 crypto tax laws particularly helpful, as there were no guides on how to track and accurately calculate virtual currency transactions. Also, with an industry that is dynamic, the virtual currency tax law seemed “prehistoric”.
The ambiguity of the Notice 2014-21 caused a group of bi-partisan U.S. lawmakers to write to the IRS, asking for more clarity. In October 2019, the IRS published a new guideline for virtual currency holders. The new law touched on areas like hard forks and airdrops.
For Brian E. Ravencraft, partner at accounting and consulting firm, Holbrook & Manter, the best way for U.S. crypto owners to comply with IRS bitcoin tax laws is to adopt a habit of robust record keeping. The tax expert distilled the compliance matrix into a three-step process […]
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