Don't let the taxman take your cryptocurrency profits – learn how to file a return
The IRS has issued guidance on how taxpayers should treat cryptocurrency profits and losses. The guidance does not provide a specific answer to whether cryptocurrency should be treated as capital gains or losses, but it provides some general suggestions.
Here are some tips for filing a cryptocurrency return:
1. Identify your cryptocurrency transactions.
First, you need to identify all of your cryptocurrency transactions. This includes buying, selling, trading, and any other activity involving cryptocurrency.
2. Calculate your cryptocurrency gains and losses.
Next, you need to calculate your cryptocurrency gains and losses. This includes determining the value of your cryptocurrency when you acquired it, the value of your cryptocurrency when you sold it, and any other changes in value.
3. Report your cryptocurrency gains and losses on your tax return.
Finally, you need to report your cryptocurrency gains and losses on your tax return. This may include reporting them as capital gains or losses, depending on the rules that apply to your situation.
How to file a cryptocurrency tax return in the US
If you are an individual taxpayer and you have realized gains from the sale of cryptocurrencies in 2018, you will need to file a tax return.
To file a cryptocurrency tax return in the US, you will need to:
Determine whether you are an individual or corporation. If you are an individual, you will need to file Form 1040, Schedule D. If you are a corporation, you will need to file Form 1120, Schedule C.
Determine your income from cryptocurrency sales. You will need to report your gross income from cryptocurrency sales on Form 1040, Schedule D. You will also need to report any losses on your cryptocurrency sales on Form 1040, Schedule D.
Pay your taxes. You will need to pay your taxes using Form 1040, Schedule E.
If you have questions about cryptocurrency taxation in the US, please contact one of our advisors at tax@cointelegraph.com.
Cryptocurrency taxes in the UK – what you need to know
Cryptocurrencies are not recognised as legal tender in the UK, meaning that they do not have the same taxation treatment as traditional currencies. This means that cryptocurrencies are treated as property for tax purposes, with any gains or losses on your holdings being reported on your tax return.
There is no specific tax rate applied to cryptocurrency transactions, but any income generated from trading or using cryptocurrencies will be subject to tax at your regular income tax rate. Additionally, any profits made from investing in cryptocurrencies may also be subject to capital gains tax.
If you are using cryptocurrency to purchase goods and services, you will likely have to pay VAT on these purchases. However, there is no explicit tax applied to cryptocurrency transactions, so it is up to the vendor whether they charge VAT or not.
If you are a resident of the UK and you are trading or using cryptocurrencies, it is important to keep track of your tax obligations. If you have any questions about cryptocurrency taxes in the UK, please don’t hesitate to contact our team.
Australia's cryptocurrency tax rules – what you need to know
Australia currently has no specific cryptocurrency tax rules in place. However, the Australian Taxation Office (ATO) has issued a warning advising taxpayers that any income or capital gains from cryptocurrency transactions may be subject to tax.
For Australian residents, any income or capital gains from cryptocurrency transactions will be subject to regular income tax and capital gains tax (CGT), depending on the type of cryptocurrency involved and your personal circumstances.
For foreign residents, any income or capital gains from cryptocurrency transactions will be subject to Australian tax if they are resident in Australia and carry on a business through which they earn the income or capital gain. In other cases, foreign residents will be subject to the relevant country's tax rules, which may include capital gains tax.
If you are not sure whether your cryptocurrency transaction is subject to Australian tax, you can find out by contacting the ATO.
Canada's cryptocurrency tax laws – what you should know
The Canadian government has not yet released any official statement on cryptocurrency taxation. However, the Canada Revenue Agency (CRA) has stated that digital currency is treated as property for tax purposes. This means that digital currency holders would be subject to capital gains taxes when they sell their holdings, just as with any other type of property.
The CRA has also stated that digital currency is not considered legal tender in Canada, meaning that businesses and individuals are not required to accept it as a form of payment.
How to declare cryptocurrency profits for tax purposes in New Zealand
Cryptocurrencies are digital or virtual tokens that use cryptography to secure their transactions and to control the creation of new units. Cryptocurrencies are decentralized, meaning they are not subject to government or financial institution control.
In order to declare cryptocurrency profits for tax purposes in New Zealand, you will need to first identify your cryptocurrency holdings and calculate their value at the time of purchase or at the time of sale. You will then need to identify any expenses associated with acquiring or holding the cryptocurrency, such as mining fees and trading costs. Finally, you will need to calculate your taxable income from your cryptocurrency holdings and submit the appropriate tax return.
If you have any questions about declaring cryptocurrency profits for tax purposes in New Zealand, please contact our team of experts at Taxman.co.nz.
South Africa's stance on crypto taxes – what you need to know
South Africa's stance on crypto taxes is still unclear. The country has not released any official statements on the subject, but it is widely believed that the authorities are still in the process of formulating a taxation policy for virtual currencies.
At present, there is no clear taxation regime in place for digital currencies, and tax authorities are reportedly exploring a number of different options. Some reports suggest that South Africa could impose a value-added tax (VAT) on digital currencies, while others suggest that the country could follow the lead of countries like China and Japan and impose a blanket ban on crypto trading and investment.
Until South Africa releases an official stance on crypto taxes, investors and traders in the country should remain vigilant and consult with their tax advisors to ensure that they are fully aware of the potential implications of their investment decisions.
Crypto taxes in India – what you need to know
Crypto taxation in India is still relatively new and complex, with a number of different regulatory bodies involved.
The Reserve Bank of India (RBI) is responsible for regulating banks and financial institutions, and is therefore the main regulator of crypto assets. However, it has not yet issued any specific regulations or guidelines surrounding crypto taxation.
The Income Tax Department (IT Department) is responsible for collecting taxes from individuals and businesses in India. It has not issued any specific guidance on crypto taxation, but it is likely that cryptoassets would be treated as taxable income.
The Central Board of Direct Taxes (CBDT) is responsible for implementing the Income Tax Act, 1961, and is charged with overseeing the tax affairs of businesses and individuals in India. It has not issued any specific guidance on crypto taxation, but it is likely that cryptoassets would be treated as taxable income.
The GST (Goods and Services Tax) Council is responsible for administering the Goods and Services Tax (GST) Act, 2017, which came into force on 1 July 2018. The GST Council has not issued any specific guidance on crypto taxation, but it is likely that cryptoassets would be treated as taxable goods and services.
Crypto taxes in India – what you need to know
Filing a cryptocurrency tax return in Japan
In Japan, cryptocurrency transactions are treated as capital gains or losses. This means that you are responsible for reporting your cryptocurrency gains and losses on your tax return.
To file a cryptocurrency tax return in Japan, you will need to:
• gather information about your cryptocurrency transactions, including the amount of cryptocurrency you acquired, sold, or traded, and the value of the cryptocurrency at the time of the transaction;
• complete Form 8949, U.S. Income Tax Return for Foreign Persons With Respect to Internal Revenue Code Section 9881 Transactions, and submit it with your tax return; and
• follow any other applicable tax regulations.
If you are an individual, you will also need to provide information about your income, deductions, and credits.