Taxes and Personal Finance Thread

[TaxLoli !UFUFU77EPY No.4110196]

I think it's high time we started having a thread to discuss the mundane yet important task of keeping the government from taking all your money. Especially here in the US where the tax code is deliberately made as complicated as possible so accountants and software companies can fleece you better.

So gather those receipts, pull up those forms, and get ready to learn how to beat the taxman on the cheap!

>Disclaimer: The TaxLoli is not a licensed accountant, lawyer, or tax preparer in any 3D jurisdiction. All information posted here is for casual reference only.

[Anonymous No.4110262]

>>4110196
Need sauce on this cartoon

[Anonymous No.4110276]

You'd better mention the Retirement Saver's Tax Credit

[Anonymous No.4110280]

>>4110196
sigh...
*unzips pants*

[Anonymous No.4110301]

>>4110196
I buy crypto as an expense for my business because we have clients we pay in bitcoin.

I was thinking of day trading our balance on the exchange it sits on, getting in and out of usd/btc. Would those trades be taxed? If so Ill probably just not trade it and just keep buying on dips to lower our expenses.

[TaxLoli !UFUFU77EPY No.4110302]

>>4110262
Imouto Sae ga Ireba.

Next time, try using WAIT.

[Anonymous No.4110316]

>>4110196
Learn to budget, learn compound interest, learn cryptocurrency because fuck taxes, done.

[Anonymous No.4110348]

How do I avoid paying tax on literally every trade?Fucking IRS classifying muh coins as property

thx TaxLoli

[TaxLoli !UFUFU77EPY No.4110374]

>>4110301
>>4110316
>>4110348

Bitcoins are treated like securities for tax purposes. You're still legally obligated to pay for capital gains from trading them. On the flipside, you can probably deduct trading losses as well. See https://www.irs.gov/pub/irs-drop/n-14-21.pdf and https://www.forbes.com/sites/greatspeculations/2017/07/10/what-you-need-to-know-about-cryptocurrencies-and-taxes/#6a0cd0341a95

[Anonymous No.4110430]

TAXATION IS THEFT
MY PROPERTY OR DEATH

[Anonymous No.4110435]

>>4110374
Sorry TaxLoli, but I think you're wrong there. From that pdf you linked: Section 4, A-1: For federal tax purposes, virtual currency is treated as property.

And since bitcoins and bitbeans aren't houses, you owe tax on every INDIVIDUAL gain you make (trading bitcoin for any alt/alt to btc is a like kind exchange of property), and it can't get deferred, so you can't just pay it all off at the end (https://www.irs.gov/newsroom/like-kind-exchanges-under-irc-code-section-1031).).

So basically, yeah. That's the reason why under a thousand people ever have ever filed legitimate taxes for crypto gainz.
How to avoid this?

[Anonymous No.4110483]

>>4110435
Yeah I hate this. Because I traded shitcoins, I owe capital gains for money even though I haven't cashed out. So that's going to end up forcing me to sell a portion of my coins, pay tax for any gain incurred for selling, and then use the left over money to pay tax again for the capital gains incurred for shitcoin trades. I'd rather hold those coins for many more years, not use them to pay a tax for gains I haven't even realized in fiat.

[Anonymous No.4110510]

>>4110435
>How to avoid this?
THE WAY YOUR FATHERS DID
REBELLION
INSURRECTION
INSURGENCE
RESISTANCE
REVOLTING
MUTINY

[Anonymous No.4110519]

>>4110196
Do I actually have to keep the receipts of all the shit I buy?Fuck man that sounds like a huge pain in the ass.

[Anonymous No.4110526]

>>4110196
Assuming I could be paid in BTC, what is stopping me from only cashing out what I need in fiat and avoiding income taxes?

[TaxLoli !UFUFU77EPY No.4110537]

>>4110435
Well, problem is no one's really sure if the like-kind rule even applies to bitcoins. See https://bitcoin.tax/blog/filing-your-bitcoin-taxes/

>>4110483
I think though if you hold them for more than a year, you can file them under the lower long-term gains rate.Also if you do enough to count as a trader, you can take advantage of the more favorable mark-to-market rules. See https://www.thetaxadviser.com/issues/2010/feb/sec475mark-to-marketelection.html and https://www.irs.gov/taxtopics/tc400/tc429

>>4110519
You only need receipts for things you think are tax-deductible.

>>4110526
Because the bitcoins sitting in your wallet are still property, and any change in the value of that property is taxable.

[Anonymous No.4110548]

>>4110435
Nobody is hunting down BTC addresses that were accessed by americans to check if they pay their taxes.

I'm sure there are a lot of early bitcoiners getting away with it, I would recommend you use decentralized exchanges if you are making over the minimum profits to be taxed on exchanges though.
VPN is overkill for now.

[Anonymous No.4110566]

>>4110196
EXCELLENT THREAD. This is what we need on /biz/, more money talk and less Muh feelings.

1. Taxes are good for one thing. BEING AVOIDED.
2. Do what the rich do: use any means necessary to make your wealth non-taxable.
3. Offshore, invest in income-producing properties, i.e. real estate, etc.

[Anonymous No.4110570]

>>4110537
but how will they know its my property?

[Anonymous No.4110574]

>>4110483
>turn 1k into 10k on a 10x coin
>sell it all to put into a second coin
>pay 4k in taxes for gains
>2nd coin is dgb
>10k investment is only worth 2k now
>exit all crypto markets

[TaxLoli !UFUFU77EPY No.4110581]

>>4110548
>>4110570
Audits.

[Anonymous No.4110586]

For tax deductions, how long do I have to keep the receipts?

I've been self-employed for 10 years and have 10 years worth of taxes/receipts in boxes and the older stuff I'm sure even the receipts are all faded now.

[Anonymous No.4110596]

>>4110566
But muh link moon

[Anonymous No.4110624]

>>4110196
ok So if one trades on GDAX, they have to pay taxes at EOY for it?
SHould all trading be done on out of country exchanges like binance? Does it matter at all?

[TaxLoli !UFUFU77EPY No.4110647]

>>4110586
Three years, except for investment losses, which should be kept for seven. Anything older than that, as well as anything illegible, is garbage.

>>4110624
The US generally requires you to pay taxes on income, regardless of where you received it. However, if you already paid taxes in some form or another at the foreign exchange, you might be able to get a credit for that amount.

[Anonymous No.4110668]

>>4110581
How would anyone prove a BTC address is yours?
It doesn't have your name associated with it in any way.
If you give your ID out to an exchange, they can snitch on you.
Good luck getting caught on a decentralized exchange.

[Anonymous No.4110693]

>>4110647
Arigato TaxLoli

[Anonymous No.4110694]

>>4110537
>I think though if you hold them for more than a year, you can file them under the lower long-term gains rate.

Yeah but I already owe short term capital gains because I sold my BTC for shit coins in less than a year. This would be a property - property trade, and according to property tax laws a capital gain is realized of the "fair market value" of the assets at the time of the trade minus cost basis.

So if you bought 10 BTC for $1000 in January. Your cost basis is $10,000. Then today if you traded your 10 BTC for ETH you could buy $60,000 worth of ETH. As soon as you make that trade, you owe short term capital gains on $50,000. You literally can't hold all your ETH for more than a year now because you'd be forced to sell some of it to cover the capital gains tax, or use a second source of income to pay it.

[Anonymous No.4110734]

>>4110647
https://www.forbes.com/sites/kellyphillipserb/2017/07/10/are-crypto-riches-tax-free/#52cbc4d754ac
but these faggots said less than a thousand filed crypto on their taxes
It's a currency damn it they can't tax me for holding money.

[TaxLoli !UFUFU77EPY No.4110749]

>>4110668
There are a number of ways to connect a bitcoin address to a user. If they do a full investigation (beyond an audit), they could theoretically search your computer and thereby link you to the address.

Also, they could go after people you've done transactions with, and combine their testimony with the transaction record to finger you as the address' owner.

>>4110694
Which is why it might be a good idea to set aside some hard cash so you don't have to sell to pay taxes.

>>4110734
Of course they can. They've decided they're property, not currency. Now, you don't have to pay taxes until you dispose of them by selling or trading, but that liability still ultimately exists.

[Anonymous No.4110764]

>get paid in crypto currency
>keep money in crypto wallet
>move to a tax haven
>ditch US passport
>cash out crypto wallet with tax haven bank
what now IRS?

[TaxLoli !UFUFU77EPY No.4110780]

>>4110764
That's the kind of gimmick that only works once. And that's of course if they don't tax it on the way out, as Trump has suggested doing.

[Twentya !!6VOjl85Pj47 No.4110790]

>>4110196
I use cointracking to do my taxes for me

[Anonymous No.4110802]

>>4110780
If you have $10,000,000 in crypto on a harddrive how the fuck are they going to know its moving anywhere? Are they going to look through your harddrive at the airport?

[TaxLoli !UFUFU77EPY No.4110817]

>>4110790
And using specialized software is a wonderful idea, especially if you have a complex portfolio of different cryptocurrencies and/or you also have more traditional investments mixed in.

>>4110802
Actually they can do that. The 4th amendment doesn't apply to border searches. If the government suspects you of serious tax evasion, you can bet your ass they'll use that opportunity to go through your stuff.

[Anonymous No.4110890]

I moved exchanges 3 times this year and traded times than I can count, along with some ICOs.

How the hell am I going to calculate all that I owe myself with crypto or do I have to hire some tax preparer who knows what cryptocurrencies are?

[Anonymous No.4110919]

>>4110196
>claims to want to keep the government from taking your money
>spends the entire thread telling goys to pay their crypto tax

the only way the IRS can find out that you own crypto is by ordering your bank to reveal your withdraws, which would turn up coinbase, gemini, kraken, etc. if they do that, then you can either claim that you are still long-term holding and haven't traded or cashed out (you can't deposit back into the bank from an exchange to claim this), or claim that you lost the private key to your wallet and therefore own no crypto property. they can't do anything past that point except to monitor you, so wait a year until they've lost interest in you and then fly to a tax haven, open a bank account there and cash out. not that hard

[TaxLoli !UFUFU77EPY No.4110952]

>>4110890
If you haven't used any tumblers, you should be able to go back through the addresses you've used and see what you got and what you paid out.

Cryptocurrencies are a rather new investment, so you may not even be able to find an accountant who will understand them right off the bat. Just keep in mind though that, unlike a lot of other laws, you can only be found guilty of tax evasion if you willingly screw it up. So as long as you give it your best effort, the worst that will happen is the IRS will tell you later on that you're wrong and make you shell out a little more.

>>4110919
I made this thread with the idea of discussing how to file simple wage earner taxes, and ways of legitimately reducing your tax liability. I didn't intend originally for this to become a bitcoin taxation thread. But it is what it its.

[Anonymous No.4111050]

>>4110952

Thanks, I'll give it a shot myself but hoping it will be enough for the IRS to ignore me. Another question. Do I have to explicitly declare to the IRS I have cryptocurrencies or would it be obvious to them from me paying the property gains taxes despite not having any property?

I'm not a big time trader (less than 5k investment in cryptos) so I doubt it would matter much as long as I pay some amount to the IRS.

I also think your idea of reducing tax liability with cryptos isn't really that feasible, since it's pretty much like property. You may be able to make any of the crypto that are ETH tokens become something like "value added investments" to your ETH much like someone builds a pool or basement or something on their property, which you still have to pay taxes on but it would be less than ETH + everything else as property and other sorts of trickery.

Very hard to reconcile.

[Anonymous No.4111105]

>>4110919
Look up FATCA anon.

Any bank that sees a U.S. citizen trying to open an account with them will
A. tell you to fuck your mother if you want to fuck or
B. Become a spy of the U.S. govt as mandated by their fear of Uncle Sams dick being repeatedly ram rodded into their tender pink assholes for the rest of their profitable existence.
Even Swiss banks aren't private anymore you need duel citizenship at the very least.

[TaxLoli !UFUFU77EPY No.4111291]

>>4111050
You don't have to explicitly say that you're dealing in cryptocurrencies, so long as you make sure to report it properly as capital gains and not ordinary income.

And you're right that there's a not a lot you can do with cryptos to reduce your liability. The only two things you can do are a) deduct losses (keeping in mind the wash rule, which presumably applies to cryptocurrencies), or b) place your crypto investments into an IRA.

[Anonymous No.4111781]

>>4110435
I swear, America has the dumbest tax laws in human history.