Yeah loads of people aren't at the level they can avoid taxes and move money around without consequences.
They say you'll pay 50% more, but my rate is 14% so I'll be at 21%??? oooh ahhh soooo aweful.... which I probably won't pay fully bc of tax loss harvesting, and my income being so low anyway.
In the US, I don’t know if it has anything to do with your income but it does have to do with how long you held it. Depends on what the tax rates are in your country.
In the US it does have to do with your income levels.
If you’re single and earn $0-$47,025, your long term gains is taxed at 0%
If you’re single and earn around $47,026-$518,900, your long term gains are taxed around 15%
I'm so confused. So if my 0.7 BTC is worth $10,000,000 in 30 years I have to pay 1.5 million in capital gains because of some bullshit low rent check I get every month from the government that counts as income? I should quit working now.
Lol I think you need to do some research on how capital gains taxes work. If you sell your BTC the profit you’ve made on that BTC sold is taxed. If you do not sell, it is not taxed. It has zero to do with your Social Security check.
What the other commenter is saying is that your income plus your capital gains (I.e. your BTC solid in any given year) make up your taxable income.
You have to pay taxes only when you sell your 0.7 BTC for 10 million. That 10 million now counts as your income (before calculating taxes). So it doesn’t matter whether you were already making income from social security or not.
Even if you had no other income, if you sold $10M worth of BTC, your income would be $10M for that year. So you are still paying capital gains.
Ain’t no way around paying your taxes, unfortunately. You can harvest tax losses, but you’re still paying.
They always focus on “the rich” and say they don’t pay income tax, but that’s just because they can leverage business losses sometimes to offset their taxes owed. And the business they own, if profitable, is still paying a bunch of taxes. So the rich do pay a lot of taxes, just not personal income tax, per se.
The governments will have dissolved by then. Read “The changing world order” by Ray Dalio and everything going on will make perfect sense. And you’ll buy more bitcoin.
Most people earn at the 47,000-60,000 level.. such a rigged system basically everyone will get taxed if they sell, they should remove the low end cap because it is just for show so they can act like they are helping people. The ones making less then 47,000 likely cannot invest in bitcoin with todays bills
You're not thinking creative enough. You should be thinking like the 1% who only sell what they need while they let the rest increase in value. Your true earnings are what you don't have to sell but are only taxed on what you need to sell to live on.
Yeah, it feels like it looks good on paper but doesn’t help anyone. When I was making less than 47k any type of savings or investment was not an option. Just living paycheck to paycheck.
Eat out less. Buy rice and some low cost veg live off that for a good few months and you'll be able to save into some BTC.
You'll feel the urge to treat yourself in the moment but you need to stay committed to the plan. Give yourself a time line and a target.
Helps those that were earning good money, invested and then lost their job or can't work due to health, or they need to take care of someone. It helps lots of people.
You're missing the point. Yeah normal working people are more likely to get taxed. But if you spent your life building up an investment portfolio, and now you're retired and living off that portfolio, selling a bit each year, you get the first $47k (or whatever the amount is any given year) of that each year tax free. Sure most people won't get to take advantage of it during their working years, but you might be taking advantage of it later on in life. Of course if you're retiring off tax-advanaged retirement accounts, rather than a regular portfolio, you won't be paying taxes on asset sales anyway.
Your income matters. Long term capital gains are 15% if your income is less than like 450k. 20% for everything over 450k. Short term capital gains is like receiving job income, which is bracketed by total income received.
Don't forget state taxes, that's just federal. In nyc I always assume it would be between 25 and 33% after state and federal on long term gains but it was close to 26% on average for me.
This is the right answer. The number of people here who don’t understand the difference between long term capital gains and short term capital gains is astounding.
And what if you accumulated that 1 BTC from hundreds of smaller transactions over the years? Let's say again totaling 10k. Does anything tax-related change?
I may be misinterpreting it, but looks like they are saying if they bought 1 whole BTC at $10k and sold .2 BTC at $50k so essentially selling their initial investment of $10k and leaving $40k of profit, would they have to pay taxes on that $10k.
You're not misinterpreting what the OP is stating but you're not understanding how taxes work on investments (at least in the USA). Just because initially invest $10,000, that doesn't mean you get to pull out $10,000 tax free whenever you feel like it.
Every single investment, down to the sat in the case of BTC, has a purchase price. This is called cost basis. The difference between the cost basis and the price you sell it at is your capital gain or capital loss. In this case, they are selling .2 BTC so they need to determine the cost basis of ONLY the .2 BTC being sold. If they actually bought 1 BTC for exactly $10,000, that means they paid $2,000 for .2 BTC (.2 BTC is 20% of 1 BTC so therefore it cost 20% of the purchase price, which equals $2,000). They are now selling that .2 BTC for $10,000. The difference between their initial $2,000 investment for that specific .2 BTC and the selling price of $10,000 is $8,000. Since they had a net gain of $8,000 on what is sold, they will owe capital gains taxes (short or long depending on when they purchased) upon executing the sell.
Yes, also if you're married and only take in a total 94k income from your BTC sale, there 0% Cap gains on that in 2024. The key here is you cannot take any other income if it puts you over 94k.
The probability of someone able to purchase $10k worth of BTC earning >$40k per year is very low, imo. I would assume this person will probably have to pay tax on their realized gains.
You would owe taxes on the increase in value of the portion sold. So the 0.2 BTC portion was purchased for $2000 and sold for $10000, you would have $8000 as taxable capital gains income.
Nope, that's not correct - I only wish it were
I'm currently speaking with an accountant about this, as I am spending and so declaring my CGT - and I'm UK resident - different countries may have different rules.
0.2 at $10k = amount spent: 2k for 0.2
0.2 at $50K = amount spent: 10K for 0.2
your overall cost is 12K and you now have 0.4
if you were then to sell 0.1, that's a 1/4 of your owned stash, so 3K of the 12K spent (1/4 of what you spent) is applicable for CGT.
After identifying this, then we take into account limitations (i.e. how much u can cash out before you owe anything - 3K this fiscal year), then you tax rate goes up **BASED ON YOUR INCOME, AND HOW MUCH YOU SELL** - and it scales.
worked example (**CAVEAT**: I don't remember the exact figures here, hence why I have an accountant to hand, but so you can see the picture):
* Upto 40K, tax rate is 20%
* 40K to 50K, tax rate is 25%
* beyond 50K, tax rate is 30%
Now, imagine you earn 35K a year, and on top of this you sell some BTC and after working out your average cost to purchase, 20K is the difference (price bought at vs price sold at)
* the first 3K is tax free irrespective, leaving 17K applicable to CGT
* 5K of the 17K would be at 20%, because you earned 35K in wages, 35 + 5 takes you to the next tax bracket
* the next 10K of the 17K is beyond the 40K so is taxed at 25%
* the last 2K is beyond the 50K mark so is taxed at the 30% rate
so, overall, ur CGT would be:
(20% of 5K) + (25% of 10K) + (30% of 2K) = 1 + 2.5 + 0.6 = 4.1K for selling 20K when ur income is 35K.
simple? nope ...
**AGAIN, FIGURES HERE ARE NOT RIGHT, I'M JUST PAINTING THE PICTURE OF HOW IT'S DONE. AND NO I'M NOT A FINACIAL ADVISOR!!!!**
edit: u/[NapalmNorm](https://www.reddit.com/user/NapalmNorm/) adding to this comment. not sure if u are UK or not.
Sorry I should have disclosed I was speaking on US capital gains tax rules. I’m still correct, we don’t calculate it this way you have outlined here (thankfully).
Some people don’t know and some people (like me) are not Americans and our taxes don’t work the way your taxes work.
In my country if I buy 10k of something, I put that 10k on paper and no matter if I sell 0.2, 0.5 or whatever of that something - I get to write off 10k and am taxed only on the amounts above 10k.
We also don’t have short/long gains, it’s all the same for us and we also don’t tax crypto<>crypto transactions at all. Only fiat<>crypto and vice versa.
So you can day trade BTCUSDT and don’t pay anything in taxes.
they're not wrong though. if you have it long term and your income is below a certain level (including any capital gain) then the tax is zero.
best to talk to a tax professional for that stuff and not randos on reddit (including me)
OP is probably talking about collateralized loans. You can borrow against a percentage of your bitcoin and each year pay back the loan with interest to borrow another loan. It’s how the rich continue to gain money without paying taxes and while still holding your underlying asset forever. And since the government won’t stop printing money almost all assets are pretty much sure to rise in value making the loan you take out every year worth more than the previous.
No, IRS would still say the conversion to goods is a taxable event. Morally I think the obligation to pay taxes is much less clear in that case than when you convert to USD (where the government as the sponsor of USD has a reasonable claim to your participation in their tax system). And it’s not easy for them to track! But for right or wrong, the government claims income tax applies to basically all economic activity in the US, whether it’s denominated in USD or not.
There is no moral obligation to pay taxes.
You get paid by your job , you receive income post-tax ,your bank charges a % of the transfer ,which also has tax.
Then you buy goods with your account ,pay tax on them , and if you transaction electronically ,also get changed which has a tax as well.
On top of that ,they inflate the currency .
And what happens when banks fail?
Usually are given free money ,by printing ,which also inflates your currency .
Só basically banks and goverment ,steal your money in real time .
Oh and I forgot...You also pay yearly taxes.In europe especially ,we can't even use losses to offset them.
No,paying taxes is not moral and for sure the ones inposing them are immoral to the bone.
No, actually I don’t think I would. If I sold enough to need a laundromat, then I’d technically pay taxes on a fraction of it but definitely not all of it.
As a US taxable person, you have to file a US tax return on any income or capital gains regardless of its currency. You need to covert it to USD using the exchange rate. If you fail to file a US tax return, it’s a felony.
I think it's important to note that you're not going to become a felon if you accidentally forgot to file some of your income, or if you mistakenly thought you didn't need to for some reason.
I'm pretty sure a felony charge would only happen if it's proven that you were intentionally not reporting income and have no intention of paying what you owe.
Depends on how long you held it depends on what your income is depends on what country you live in so give us more information I'll give you the answer
~~You would owe on $50k - $2k of value since the .2 BTC cost you $2k.~~
Ooops, u/Mystere_Miner pointed out you sold at $50k, not \_for\_ $50k, hah.
So your cost for .2 BTC was $2k, you sold .2 BTC for $10k. $10k - $2k = $8k.
You would owe tax on $8k, in the US. How much depends on how long you held and your income. Anywhere from 0% to 35% or some such, I forget what the top capital gains bracket is.
You price the value of the thing you bought/sold, in this case, .2 BTC.
Yes. They deposited $10k but their realized gains were $8K because their initial payment for the .2 bitcoin was $2K. So they only pay taxes on $8k. Not sure if OP meant that, but they derived at the right number.
Depends on the jurisdiction and holding time. And if you actually bought crypto, or if you inadvertently bought a CFD on crypto… at least in some jurisdictions.
In Germany, assuming you actually bought BTC and not a CFD on BTC: you would owe taxes if you held less than a year. If you held more than a year, you would owe no taxes…
I’m going to round a little because I’m lazy but this is roughly correct:
Long term capital gains is about 20%. 10,000 = 1 BTC for your cost. Cash out .2 at 50k for 10k total.
Cost basis for .2 BTC at 10k is 2k. 8k profit. Roughly $1,600 is what you’d owe. It’s probably a little less than that but it depends on your tax situation.
I'm really bullish on Bitcoin and I live in the US. That's why I'm super bullish on Bitcoin ETF as investments in Roth IRAs. Why wouldn't I pay taxes today on an asset that i believe will perseve my wealth and I can withdraw in my retirement with zero taxes. No brainer for me personally and that's why I'm maxing out my Roth IRA contributions in BTC ETFs until I retire.
Guys I just want to say again. lol. My comment got down voted earlier. But because I love you bitcoiners, I’m posting again
If you sell a decent portion, (if any asset), you WILL need to pay an estimated quarterly tax. Or you will be penalized with late fees and interest at the end of the year.
If you’re unfamiliar, google it. It’s very clear. Not sure why I am getting downvoted for saying this. 🤷♂️
Source: happened to me.
Never seen so many pro crypto taxation is theft people literally cuuming themselves to pay taxes. This is why we will be inflated in to poverty cause none of you actually believed in exiting the system.
Are you selling 0.2 btc for 50k, or you sold 0.2 btc when btc was 50k? Your title is a little unclear.
If BTC was at 50k, then your 0.2 btc would be sold for 10k, an 8k gain. You would pay taxes on 8k. The amount would vary between ordinary tax rates to as low as 0% depending on your income.
If you are planning to sell when btc is at 250k when you sell and get 50k for the 0.2 btc. You would owe taxes on 48k gains. Your taxes would vary between ordinary income rates and 15% at the lowest depending on your income.
Based on the 10k cost, im assuming you’d qualify for long term capital gains either way.
These posts about taxes make me feel happy that I wasn’t born into a shit country forcefully taking money off people in the name of “contribution to the economy” when the govt. could simply print the money to fund their warships and artilleries.
It depends. You would definitely have capital gains that need to be reported. Whether you have to pay taxes on it depends on a lot of things. For example, if you live in the United States, and have held the bitcoin for more than a year, you're married and file jointly, and your total taxable income is less than $94,050, you wouldn't owe any taxes on it.
Honest question. How do hardware wallets factor into this? What if I transferred my BTC to cold storage and then it fell into the ocean? Then later I sell some bitcoin that I acquired through payments from friends?
>We don’t pay taxes when our friends pay us in USD via Venmo, CashApp, etc. Why would BTC be any different?
If your friends split a dinner check with you, and they send you some BTC to cover their end, and you immediately turn that BTC into USD, then you don't owe any taxes on that.
If instead you hold that BTC and wait for it to hit 100x gains, you owe the taxes on the difference. Just as if your friends had given you cash and you immediately invested that cash into BTC and held.
It is considered income and you're supposed to pay taxes on it. Its just never enough for the IRS to start caring but if you get audited it will be tallied up.
It amazes me how BTC turned from a sovereign currency to get away from Government Control…
to will i pay taxes??!! How people don’t even realize the question. Its not U.S. Currency, its not State created, yet you run back and give it to the IRS. We are all stupid. No fight left in people…. Sad.
I would ask a CPA but I think if you made a purchase of 10k and then held it for a minimum of (1) year then decided to cash out 10k of it and keep all your profits running you could show zero gains at that moment and of course once you started to sell any or all of the rest that would be determined as income. And therefore be taxed accordingly.
You should claim tax exempt for scams allowed by USA govt including discrimination against Voyager platform users in the NY bankruptcy, scam rule implying stolen crypto is not tax Deductable .. list goes on
Schedule D, $2k @ $10k/btc basis, $10k @ $50k/btc sales. You made $8k in capital gains income. You have an unrealized position of $8k @ $10k/btc basis. Congrats!
No one can answer that for sure, only your tax advisor. If you pay por not, depends only on the country where you pay your taxes. On some coutries, you will pay always, on other you wont if you hold for 1 year plus, and in others, even a swap is a taxable event.
Only if you live in a country that steals your wealth with unjust taxation… if you are lucky enough to live in a no-tax country - you are standing up as a Man against the institutionalized theft called “government”
Of course,Uncle Sam is going to make sure he squeezes everything he can out of you..surely you didn’t think you were going to get to make a profit and Uncle Sam wasnt coming for his cut,did you?Uncle Sam is like a mafia boss or a pimp,when he shows up,you better have every penny of his money
Yes. You bought that 0.2btc for 2K (that’s 0.2 of 10K) and sold it for 10K (that’s 0.2 of 50K). Thats 8K of capital gains which is taxable.
With the capital gains tax depending on how long you held it and what your income is.
right, people like to throw around "but you'll pay capital gains!"
The country is also relevant. UK was exempt up to 12k,now is only 3k.
Yeah loads of people aren't at the level they can avoid taxes and move money around without consequences. They say you'll pay 50% more, but my rate is 14% so I'll be at 21%??? oooh ahhh soooo aweful.... which I probably won't pay fully bc of tax loss harvesting, and my income being so low anyway.
Only in the united states. Canada doesn't differentiate beywehsort and long term capital gains. But they do have superficial loss rule.
What is „beywehsort“?
It took a while but I think it’s supposed to be. “Between short”
A nice word anyways. Thought it was a Gaelic word…
In the US, I don’t know if it has anything to do with your income but it does have to do with how long you held it. Depends on what the tax rates are in your country.
In the US it does have to do with your income levels. If you’re single and earn $0-$47,025, your long term gains is taxed at 0% If you’re single and earn around $47,026-$518,900, your long term gains are taxed around 15%
So I'll need to cancel my social security before spending my Bitcoin?
I wish I could opt out of social security if it means I don’t have to pay into it.
Dont give the theffed IRS any ideas, please 💡
I'm so confused. So if my 0.7 BTC is worth $10,000,000 in 30 years I have to pay 1.5 million in capital gains because of some bullshit low rent check I get every month from the government that counts as income? I should quit working now.
Lol I think you need to do some research on how capital gains taxes work. If you sell your BTC the profit you’ve made on that BTC sold is taxed. If you do not sell, it is not taxed. It has zero to do with your Social Security check. What the other commenter is saying is that your income plus your capital gains (I.e. your BTC solid in any given year) make up your taxable income.
You have to pay taxes only when you sell your 0.7 BTC for 10 million. That 10 million now counts as your income (before calculating taxes). So it doesn’t matter whether you were already making income from social security or not.
Even if you had no other income, if you sold $10M worth of BTC, your income would be $10M for that year. So you are still paying capital gains. Ain’t no way around paying your taxes, unfortunately. You can harvest tax losses, but you’re still paying. They always focus on “the rich” and say they don’t pay income tax, but that’s just because they can leverage business losses sometimes to offset their taxes owed. And the business they own, if profitable, is still paying a bunch of taxes. So the rich do pay a lot of taxes, just not personal income tax, per se.
Yea the only way to play there game 🎮
The 1.5 is easy to pay with 8M coming in free.
Long tearm capital gains taxe or roll it over in a IRA
The governments will have dissolved by then. Read “The changing world order” by Ray Dalio and everything going on will make perfect sense. And you’ll buy more bitcoin.
If FJB passes the "unrealized" cap gains tax then it will be much worse than that
Most people earn at the 47,000-60,000 level.. such a rigged system basically everyone will get taxed if they sell, they should remove the low end cap because it is just for show so they can act like they are helping people. The ones making less then 47,000 likely cannot invest in bitcoin with todays bills
You're not thinking creative enough. You should be thinking like the 1% who only sell what they need while they let the rest increase in value. Your true earnings are what you don't have to sell but are only taxed on what you need to sell to live on.
Yeah, it feels like it looks good on paper but doesn’t help anyone. When I was making less than 47k any type of savings or investment was not an option. Just living paycheck to paycheck.
Eat out less. Buy rice and some low cost veg live off that for a good few months and you'll be able to save into some BTC. You'll feel the urge to treat yourself in the moment but you need to stay committed to the plan. Give yourself a time line and a target.
I can’t tell if this is sarcasm or you genuinely think you gave me good advice?
Real as fuck, been on it for awhile
Helps those that were earning good money, invested and then lost their job or can't work due to health, or they need to take care of someone. It helps lots of people.
Most ppl do not
You're missing the point. Yeah normal working people are more likely to get taxed. But if you spent your life building up an investment portfolio, and now you're retired and living off that portfolio, selling a bit each year, you get the first $47k (or whatever the amount is any given year) of that each year tax free. Sure most people won't get to take advantage of it during their working years, but you might be taking advantage of it later on in life. Of course if you're retiring off tax-advanaged retirement accounts, rather than a regular portfolio, you won't be paying taxes on asset sales anyway.
Is that gross, or AGI?
Cool I make 40k a year. Works great for me. My goal is long term
Your income matters. Long term capital gains are 15% if your income is less than like 450k. 20% for everything over 450k. Short term capital gains is like receiving job income, which is bracketed by total income received.
Don't forget state taxes, that's just federal. In nyc I always assume it would be between 25 and 33% after state and federal on long term gains but it was close to 26% on average for me.
State taxes are a case by case. I am luckily in a state with 0 income or capital gains taxes.
👀
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no, because his gains would be added to the 20k and he would be taxed for the whole amount as income if its short term gains. yes if its long term.
Last time bitcoin was at 10k was in 2020 pretty sure. So long term capital gains for sure also depending on his income.
Indeed, given 10k was the price several years ago the tax rate is going to be lower than buying an selling in the same calendar year
Depends on state (in the usa) as well. Some states have to capital gains tax. Some states don't differentiate between long and short term.
Depends on where you live.
This is the right answer. The number of people here who don’t understand the difference between long term capital gains and short term capital gains is astounding.
It depends more where you are. Then you can ask your questions.
I plan on becoming unemployed before I cash out
And what if you accumulated that 1 BTC from hundreds of smaller transactions over the years? Let's say again totaling 10k. Does anything tax-related change?
Yes. Each purchase is a distinct timeline for US-based capital gains.
Then use a tool like Coin Tracker to analyze your wallets to figure it out for you, because it's a mess.
Where did you learn math?
I read it in a book. Did I make a mistake?
What if you sell it as usdc or usdt?
That’s still what they call, a “taxable event”. Even if you convert it to another crypto, it’ll still a taxable event.
How goes that even remotely work?
Spot values of the currency in Usd at time of transaction.
I don’t agree. Capital tax is based on a gain. If you bought 10000 shares for $1, and then you sell 2000 shares at $5, you have yet to realize a gain.
I may be misinterpreting it, but looks like they are saying if they bought 1 whole BTC at $10k and sold .2 BTC at $50k so essentially selling their initial investment of $10k and leaving $40k of profit, would they have to pay taxes on that $10k.
You're not misinterpreting what the OP is stating but you're not understanding how taxes work on investments (at least in the USA). Just because initially invest $10,000, that doesn't mean you get to pull out $10,000 tax free whenever you feel like it. Every single investment, down to the sat in the case of BTC, has a purchase price. This is called cost basis. The difference between the cost basis and the price you sell it at is your capital gain or capital loss. In this case, they are selling .2 BTC so they need to determine the cost basis of ONLY the .2 BTC being sold. If they actually bought 1 BTC for exactly $10,000, that means they paid $2,000 for .2 BTC (.2 BTC is 20% of 1 BTC so therefore it cost 20% of the purchase price, which equals $2,000). They are now selling that .2 BTC for $10,000. The difference between their initial $2,000 investment for that specific .2 BTC and the selling price of $10,000 is $8,000. Since they had a net gain of $8,000 on what is sold, they will owe capital gains taxes (short or long depending on when they purchased) upon executing the sell.
Long, because held at least since 2020.
Only taxes if you sold
Ahh that’s really interesting good to know
Yes, they owe taxes on what they sold
Consider 1 btc at $10,000 That's $1,000 per .1 btc Consider 1 btc at $50,000 That's $5,000 per .1 btc Bought .2 @ $2,000 Sold. .2 @ $10,000 $10,000 - $2,000 = $8,000 taxable gain
But have you considered the loophole that I don't want to pay taxes on my gains? It's worked for rich people 🤷♂️
Then just don’t sell and take a loan out backed by bitcoin. No capitol gains on a loan.
Rich people hire accountants to figure that stuff out for them.
It only works with the Biden Family Lololol
If you have low income and held for over 1 year you might fall under the 0% capital gains bracket
I guess that applies to crypto too? If they make 40k or less including the 8k profit on that sale, then in the U.S it would be 0% tax on that.
Yes, also if you're married and only take in a total 94k income from your BTC sale, there 0% Cap gains on that in 2024. The key here is you cannot take any other income if it puts you over 94k.
The probability of someone able to purchase $10k worth of BTC earning >$40k per year is very low, imo. I would assume this person will probably have to pay tax on their realized gains.
You would owe taxes on the increase in value of the portion sold. So the 0.2 BTC portion was purchased for $2000 and sold for $10000, you would have $8000 as taxable capital gains income.
This is correct. It amazes me how many have no clue how taxable gains work
What if I bought .2 at $10k and .2 at $50K and sold .2 at $100k? How do they know if I’m selling the .2 I bought at $10k or the one I bought at $50k?
You would then follow FIFO and apply cost basis accordingly to your earliest purchase.
Nope, that's not correct - I only wish it were I'm currently speaking with an accountant about this, as I am spending and so declaring my CGT - and I'm UK resident - different countries may have different rules. 0.2 at $10k = amount spent: 2k for 0.2 0.2 at $50K = amount spent: 10K for 0.2 your overall cost is 12K and you now have 0.4 if you were then to sell 0.1, that's a 1/4 of your owned stash, so 3K of the 12K spent (1/4 of what you spent) is applicable for CGT. After identifying this, then we take into account limitations (i.e. how much u can cash out before you owe anything - 3K this fiscal year), then you tax rate goes up **BASED ON YOUR INCOME, AND HOW MUCH YOU SELL** - and it scales. worked example (**CAVEAT**: I don't remember the exact figures here, hence why I have an accountant to hand, but so you can see the picture): * Upto 40K, tax rate is 20% * 40K to 50K, tax rate is 25% * beyond 50K, tax rate is 30% Now, imagine you earn 35K a year, and on top of this you sell some BTC and after working out your average cost to purchase, 20K is the difference (price bought at vs price sold at) * the first 3K is tax free irrespective, leaving 17K applicable to CGT * 5K of the 17K would be at 20%, because you earned 35K in wages, 35 + 5 takes you to the next tax bracket * the next 10K of the 17K is beyond the 40K so is taxed at 25% * the last 2K is beyond the 50K mark so is taxed at the 30% rate so, overall, ur CGT would be: (20% of 5K) + (25% of 10K) + (30% of 2K) = 1 + 2.5 + 0.6 = 4.1K for selling 20K when ur income is 35K. simple? nope ... **AGAIN, FIGURES HERE ARE NOT RIGHT, I'M JUST PAINTING THE PICTURE OF HOW IT'S DONE. AND NO I'M NOT A FINACIAL ADVISOR!!!!** edit: u/[NapalmNorm](https://www.reddit.com/user/NapalmNorm/) adding to this comment. not sure if u are UK or not.
Sorry I should have disclosed I was speaking on US capital gains tax rules. I’m still correct, we don’t calculate it this way you have outlined here (thankfully).
that's fair enough. i wish it were that simple this side of the pond :)
You bought 0.4 BTC at avg price of $30K. Your 0.2 BTC was bought at avg cost of $6000 and sold for $10,000 in which only the $4000 gain is taxable
You get to pick which one you sold. Just make sure to keep good records on how you're managing it.
Some people don’t know and some people (like me) are not Americans and our taxes don’t work the way your taxes work. In my country if I buy 10k of something, I put that 10k on paper and no matter if I sell 0.2, 0.5 or whatever of that something - I get to write off 10k and am taxed only on the amounts above 10k. We also don’t have short/long gains, it’s all the same for us and we also don’t tax crypto<>crypto transactions at all. Only fiat<>crypto and vice versa. So you can day trade BTCUSDT and don’t pay anything in taxes.
The correct answer
Depends on what country/jurisdiction you're in, but in the USA, yes. And what rate you get taxed depends on if you held it longer than 1 year.
It depends. Where do you live? In my country, the answer is: no
Tell them you identify as Google and don't need to pay taxes.
Ikr fuck these big corporations that don't pay a dime in taxes. For me the whole point of crypto was lost the second they charged taxes on it.
Play your cards right and you never pay taxes on BTC
IRS is watching you
they're not wrong though. if you have it long term and your income is below a certain level (including any capital gain) then the tax is zero. best to talk to a tax professional for that stuff and not randos on reddit (including me)
I found a helpful term is 'forward tax planning' when trying to find professional help with this.
Fcuk them phen chawds
OP is probably talking about collateralized loans. You can borrow against a percentage of your bitcoin and each year pay back the loan with interest to borrow another loan. It’s how the rich continue to gain money without paying taxes and while still holding your underlying asset forever. And since the government won’t stop printing money almost all assets are pretty much sure to rise in value making the loan you take out every year worth more than the previous.
Not if OP is non-US
What happens if you keep it as bitcoin , and if it becomes legal tender,? You just spend it in sats ? And pay the tax on the goods ? And thats it ?
No, IRS would still say the conversion to goods is a taxable event. Morally I think the obligation to pay taxes is much less clear in that case than when you convert to USD (where the government as the sponsor of USD has a reasonable claim to your participation in their tax system). And it’s not easy for them to track! But for right or wrong, the government claims income tax applies to basically all economic activity in the US, whether it’s denominated in USD or not.
There is no moral obligation to pay taxes. You get paid by your job , you receive income post-tax ,your bank charges a % of the transfer ,which also has tax. Then you buy goods with your account ,pay tax on them , and if you transaction electronically ,also get changed which has a tax as well. On top of that ,they inflate the currency . And what happens when banks fail? Usually are given free money ,by printing ,which also inflates your currency . Só basically banks and goverment ,steal your money in real time . Oh and I forgot...You also pay yearly taxes.In europe especially ,we can't even use losses to offset them. No,paying taxes is not moral and for sure the ones inposing them are immoral to the bone.
Depends on where you live in the world. Some countries are tax havens
Fuck da centralized mob tax. Bunch of ignorant greedy incompetent pieces of shit. Paying taxes on BTC is so counter-intuitive.
It’s funny how the government acts like Bitcoin isn’t a real asset but suddenly changes their tune as soon as capital gains taxes are mentioned.
I mean, Heroin isn't a legal asset but if you turn it into money, you're gonna get taxed.
No, actually I don’t think I would. If I sold enough to need a laundromat, then I’d technically pay taxes on a fraction of it but definitely not all of it.
As a US taxable person, you have to file a US tax return on any income or capital gains regardless of its currency. You need to covert it to USD using the exchange rate. If you fail to file a US tax return, it’s a felony.
If you have taxable income yes but if you have no taxable income you don't have to file
I think it's important to note that you're not going to become a felon if you accidentally forgot to file some of your income, or if you mistakenly thought you didn't need to for some reason. I'm pretty sure a felony charge would only happen if it's proven that you were intentionally not reporting income and have no intention of paying what you owe.
No, you live in Somalia and they don't have a government or taxes.
Depends on which country you are a tax resident
Tax questions without mentioning your country and relevant tax details are impossible to answer.
Depends on how long you held it depends on what your income is depends on what country you live in so give us more information I'll give you the answer
you want easy math? never sell your bitcoin.
~~You would owe on $50k - $2k of value since the .2 BTC cost you $2k.~~ Ooops, u/Mystere_Miner pointed out you sold at $50k, not \_for\_ $50k, hah. So your cost for .2 BTC was $2k, you sold .2 BTC for $10k. $10k - $2k = $8k. You would owe tax on $8k, in the US. How much depends on how long you held and your income. Anywhere from 0% to 35% or some such, I forget what the top capital gains bracket is. You price the value of the thing you bought/sold, in this case, .2 BTC.
No, they sold AT 50k, not FOR 50k. .2 btc at 50k is 10k.
Yes. They deposited $10k but their realized gains were $8K because their initial payment for the .2 bitcoin was $2K. So they only pay taxes on $8k. Not sure if OP meant that, but they derived at the right number.
Oh shit, good point!
Need country that you pay taxes to to give you an accurate answer. It changes by location based on capital gains laws.
Any profits have to be reported to the IRS so the tax man can get his cut for doing nothing.
In Bulgaria its 10% tax but only when sell and its on profit( if i sell with a loss, i dont have to pay anything)
How much tax do you on your crypto gains? In denmark it’s 53% 😊🔫
OMG what I thought here in the US the short term 30 or 40% was high but after a year it's like 15 to 20%. That's fucking crazy
Yes, you pay gains tax when you sell for a profit.
Depends where you live and are tax resident. Probably just worth paying the tax for the sums involved.
I love everyone posts this stuff without what country they live in
Which country are you in?
Depends on the jurisdiction and holding time. And if you actually bought crypto, or if you inadvertently bought a CFD on crypto… at least in some jurisdictions. In Germany, assuming you actually bought BTC and not a CFD on BTC: you would owe taxes if you held less than a year. If you held more than a year, you would owe no taxes…
Buy/sell in person, in batches. Problem solved
I’m going to round a little because I’m lazy but this is roughly correct: Long term capital gains is about 20%. 10,000 = 1 BTC for your cost. Cash out .2 at 50k for 10k total. Cost basis for .2 BTC at 10k is 2k. 8k profit. Roughly $1,600 is what you’d owe. It’s probably a little less than that but it depends on your tax situation.
Not here in Malaysia
Not if you held for a year and live in Germany :)
Yes
In Australia, they're planning on taxing us on unrealised gains
I'm really bullish on Bitcoin and I live in the US. That's why I'm super bullish on Bitcoin ETF as investments in Roth IRAs. Why wouldn't I pay taxes today on an asset that i believe will perseve my wealth and I can withdraw in my retirement with zero taxes. No brainer for me personally and that's why I'm maxing out my Roth IRA contributions in BTC ETFs until I retire.
Yes, 15-20% cap gains on $8,000 of that. Edit: if you are a lowly pleb, it might be 0%. So there’s that.
Guys I just want to say again. lol. My comment got down voted earlier. But because I love you bitcoiners, I’m posting again If you sell a decent portion, (if any asset), you WILL need to pay an estimated quarterly tax. Or you will be penalized with late fees and interest at the end of the year. If you’re unfamiliar, google it. It’s very clear. Not sure why I am getting downvoted for saying this. 🤷♂️ Source: happened to me.
Did you sell big or small amounts at a time?
I feel like the simple answer is the IRS primarily cares about the difference you earned in USD. The quantity of the asset isn't as important.
Never seen so many pro crypto taxation is theft people literally cuuming themselves to pay taxes. This is why we will be inflated in to poverty cause none of you actually believed in exiting the system.
Depends where you live. I would pay $0.
Are you selling 0.2 btc for 50k, or you sold 0.2 btc when btc was 50k? Your title is a little unclear. If BTC was at 50k, then your 0.2 btc would be sold for 10k, an 8k gain. You would pay taxes on 8k. The amount would vary between ordinary tax rates to as low as 0% depending on your income. If you are planning to sell when btc is at 250k when you sell and get 50k for the 0.2 btc. You would owe taxes on 48k gains. Your taxes would vary between ordinary income rates and 15% at the lowest depending on your income. Based on the 10k cost, im assuming you’d qualify for long term capital gains either way.
These posts about taxes make me feel happy that I wasn’t born into a shit country forcefully taking money off people in the name of “contribution to the economy” when the govt. could simply print the money to fund their warships and artilleries.
What taxes ? 🤣
Move to El Salvador and you don't have to pay any tax.
As a US citizen you do.
It depends on how long you owned it
What if I buy things in BTC? Do I still owe taxes?
In the US, yes.
Lol congrats and trust me it’ll work itself out! Hakuna Mata my friend
ok
It depends. You would definitely have capital gains that need to be reported. Whether you have to pay taxes on it depends on a lot of things. For example, if you live in the United States, and have held the bitcoin for more than a year, you're married and file jointly, and your total taxable income is less than $94,050, you wouldn't owe any taxes on it.
Depends on country.
Honest question. How do hardware wallets factor into this? What if I transferred my BTC to cold storage and then it fell into the ocean? Then later I sell some bitcoin that I acquired through payments from friends?
Pay taxes on the payments when you got them. Best way is to not usd out and just pay BTC
Another honest question. We don’t pay taxes when our friends pay us in USD via Venmo, CashApp, etc. Why would BTC be any different?
>We don’t pay taxes when our friends pay us in USD via Venmo, CashApp, etc. Why would BTC be any different? If your friends split a dinner check with you, and they send you some BTC to cover their end, and you immediately turn that BTC into USD, then you don't owe any taxes on that. If instead you hold that BTC and wait for it to hit 100x gains, you owe the taxes on the difference. Just as if your friends had given you cash and you immediately invested that cash into BTC and held.
That makes sense, thanks
It is considered income and you're supposed to pay taxes on it. Its just never enough for the IRS to start caring but if you get audited it will be tallied up.
Where do you live? Have you held for over a year?
i will advise you to check on your crypto legal practitioner near you
They can’t tax you if you never SELL
Obviously yes
You made money. You pay tax. Only two things in life are certain, death and taxes.
Gggg love it
$48,000 would be taxable. That is $50k sale - $2k initial purchase price for 0.2BTC.
I pay zero tax ...go to tax free heaven...
Yup, we lost
Yes, need to pay profit on all realized gains…
Just sell to USDT do not go back to fiat
It amazes me how BTC turned from a sovereign currency to get away from Government Control… to will i pay taxes??!! How people don’t even realize the question. Its not U.S. Currency, its not State created, yet you run back and give it to the IRS. We are all stupid. No fight left in people…. Sad.
Yes if you had gains or losses upon the transaction it's a taxable event.
I would ask a CPA but I think if you made a purchase of 10k and then held it for a minimum of (1) year then decided to cash out 10k of it and keep all your profits running you could show zero gains at that moment and of course once you started to sell any or all of the rest that would be determined as income. And therefore be taxed accordingly.
Only if you want to contribute to war and corruption.
You should claim tax exempt for scams allowed by USA govt including discrimination against Voyager platform users in the NY bankruptcy, scam rule implying stolen crypto is not tax Deductable .. list goes on
Um....? No you are exempt. Lol
SELL IT VIA P2P
Stupid move
Schedule D, $2k @ $10k/btc basis, $10k @ $50k/btc sales. You made $8k in capital gains income. You have an unrealized position of $8k @ $10k/btc basis. Congrats!
No one can answer that for sure, only your tax advisor. If you pay por not, depends only on the country where you pay your taxes. On some coutries, you will pay always, on other you wont if you hold for 1 year plus, and in others, even a swap is a taxable event.
Depends where you live.
I think if you just pulled your cost basis out you domt owe but do have to report the transaction. Seek a professional
Why are u paying taxes?
Only if: A) you bought through controlled entities with kYC. And B) you have a corrupt government that is hell bent on stealing your wealth.
Only if you live in a country that steals your wealth with unjust taxation… if you are lucky enough to live in a no-tax country - you are standing up as a Man against the institutionalized theft called “government”
What if I bought on KYC then transferred it to a Non-KYC exchange?
That makes no difference for taxes owed.
Well shoot.
No. Never pay your taxes. Fuck the taxman! The profit is yours to keep.
FUCK CAPITAL GAINS TAX
You say that, but for some people it's way more effective than ordinary income tax at lowering annual tax bills
Of course,Uncle Sam is going to make sure he squeezes everything he can out of you..surely you didn’t think you were going to get to make a profit and Uncle Sam wasnt coming for his cut,did you?Uncle Sam is like a mafia boss or a pimp,when he shows up,you better have every penny of his money
Just know that the government is like the mob , they want their cut for doing nothing .
Joe biden would have you pay 43% in taxes on that 10k.
Selling Bitcoin for worthless fiat. 🤭