Updates For Cryptocurrency?

Many people remember late 2017 and early 2018 when the cryptocurrency market was booming. Bitcoin reached an all-time high worth over $19,000 per digital coin, there were new types starting up everywhere, and everyone seemed to be making a fortune. Then reality struck, as countries began to set regulations on the previously unregulated market, the prices dwindled.

Now Bitcoin sits around $6,500, and the overall market cap is much smaller now that many people have pulled out their money. Yet, some people have stayed true and kept their investments, but this has left them with a question, how do they pay taxes on what they own?

Recently, a group of lawmakers sent an open letter to the IRS commissioner to develop clearer rules on how cryptocurrency profits should be taxed. The issue stems from a lack of guidance after the boom wherein the IRS has relied on outdated models that cause the IRS to collect earnings data on customers from crypto-exchanges such as Coin base. The lawmakers have said, “We are concerned that the IRS is seeking to enforce guidance that does not adequately advise taxpayers of their tax obligations when using virtual currencies.” A sentiment that has been mirrored by crypto-advocacy groups. The groups have said the IRS’s method looks to tax all purchases with cryptocurrencies.

If you own cryptocurrency, you might owe taxes on it. The law can be tricky so it is important to have someone on your side, if you have questions contact us at the Center for Financial, Legal & Tax, Inc.