Fort Lauderdale Accountant Can Help You Claim Bitcoin Gains/Losses on Taxes
scottks1/Flickr creative commons
Bitcoin has become hugely popular because its potential as a new type of currency that operates outside of any government control. Because it can be bought, sold, and traded anonymously online, outside of banking institutions, proponents say it can help make commerce fast and easy and empower people in third-world areas that have trouble getting access to capital. But skeptics say it can be used for money laundering and drug deals.
Observers have been watching to see how the U.S. government ends up dealing with this phenomenon -- which could be a threat to its financial system. Last week, the IRS both legitimized it and diminutized it, declaring that bitcoin would be treated not like another currency (like yen, euros, etc) but like an asset (such as a stock).
On March 25th, the tax overlords released guidelines saying that the IRS will tax bitcoin as property, not as currency.
Florida Panthers v Vancouver Canucks
TicketsSat., Dec. 10, 7:00pm
UberTAILGATE: Hard Rock Stadium Dolphins vs. Cardinals
TicketsSun., Dec. 11, 12:00pm
LUXURY SEATING: Miami Dolphins v Arizona Cardinals
TicketsSun., Dec. 11, 1:00pm
Miami Dolphins vs. Arizona Cardinals
TicketsSun., Dec. 11, 1:00pm
Yes -- it has to be declared on your taxes. If you own bitcoin and it goes up in value, you'll have to pay capital gains tax on the profits. But, conversely, if its value dips, you may be able to count that as a loss.
To get through the muck of details in time for the April 15th filing deadline, local tax accountant and bitcoin expert Angelina Pluzhnyk shares some insights.
Pluzhnyk runs Bitcountant, a bitcoin accounting and compliance firm in Fort Lauderdale.
Here is what she had to say.
What things do a bitcoiner need to consider this tax season when filing in April? The IRS released its 'Virtual Currency Guidance' on March 25th. We are required to treat Bitcoin and other cryptocurrencies as property and not as a currency. This is good news for individuals and businesses that hold a virtual currency as an asset / property. Assets held over one year as an investment are long-term capital assets and are subject to the capital gains tax, which is 20% now.
Do bitcoiners, by law, have to adhere to paying taxes on bitcoin? Yes, individuals and businesses have to pay taxes on bitcoin gains. As mentioned in the 'IRS Virtual Currency Guidance' of March 25th, salaries and business transactions paid with Bitcoin are taxable.
Also, individuals and businesses should keep all of their bitcoin/virtual currency related records the same way they keep their traditional financial records. The general rule is to keep your tax records for three years. The IRS can audit your taxes back for up to three years.
What about in the event that the individual lost money with bitcoin? This is a very good question. It depends on the exact circumstances. For example, if an individual traded bitcoin on a virtual currency exchange, the rules for gains and losses of property apply. If capital losses exceed capital gains, the loss can be deducted up to an annual limit of $3,000 for a married couple filing jointly or $1,500 for a single person. If your losses are significantly higher than $3,000/$1,500, it may take a while for you to use up the capital loss deduction.
Also, lost or stolen bitcoins can be potentially tax deductible. One may be able to take a "casualty loss deduction" (IRS Publication 547). Calculating the cost basis of Bitcoin can become very tricky, however.
How many bitcoin clients do you have in South Florida? Our clients are from many areas in the USA. Bitcoin users in South Florida tend to be predominantly investors and people using it for remittances.
Have you've helped anyone who lost their Bitcoin in the Mt Gox implosion? No, but we helped someone who lost bitcoins. How many bitcoin accountants are there in the U.S.? It is impossible to know. However, our understanding is that there are very few. This is why we get clients from around the country. Also, we get referrals form Xen Accounting from Canada.
Are you a regular accountant as well as a bitcoin accountant? Yes.
Get the ICYMI: Today's Top Stories Newsletter
Catch up on the day's news and stay informed with our daily digest of the most popular news, music, food and arts stories in Broward / Palm Beach, delivered to your inbox Monday through Friday.