Report: American keeping cryptocurrency trading gains secret from IRS

The IRS considers cryptocurrencies such as bitcoin as property for federal tax purposes, meaning any profits or losses from the sale or exchange of the virtual coins should be reported.

By REUTERS
February 13, 2018 10:15
1 minute read.
Bitcoin

Bitcoin, the world's most famous cryptocurrency. (photo credit: BENOIT TESSIER /REUTERS)

 
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NEW YORK - Less than 100 people out of the 250,000 individuals who have already filed federal taxes this year through company Credit Karma reported a cryptocurrency transaction to US tax authorities, the company said on Tuesday.

This is despite nearly 57 percent of the 2000 Americans surveyed by the credit score startup and research firm Qualtrics last month saying they had realized some gains from cryptocurrencies, according to a Credit Karma study.

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Roughly the same percentage said they had never reported cryptocurrency gains to the Internal Revenue Service, while nearly half of those polled said they understood how owning cryptocurrencies affected their taxes, the study said.

The IRS considers cryptocurrencies such as bitcoin as property for federal tax purposes, meaning any profits or losses from the sale or exchange of the virtual coins should generally be reported as capital gains or losses.

Trading of cryptocurrencies, digital tokens whose value is not backed by central banks and hard assets, surged in 2017 amid a rally in their price. A single bitcoin is worth more than $8000, compared with $1000 a year ago.

Despite the surge it remains unclear how many Americans hold cryptocurrencies as these are bought and sold on online platforms, sometimes anonymously or using pseudonyms. US-based cryptocurrency exchange Coinbase says it has 10 million users, although it is unclear how many of these are in the U.S.

Jagjit Chawla, general manager for Credit Karma Tax said the company was not too surprised that few people had reported cryptocurrency gains as Americans with more complex tax situations tend to file closer to the deadline.

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"However, given the popularity of bitcoin and cryptocurrencies in 2017, we'd expect more people to be reporting," Chawla said in a statement.

The deadline for filing taxes this is year is April 17.

The IRS projects that around 156 million individuals will file this year.

Around 1 million people filed their taxes with Credit Karma's service last year.

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