I recently released the Home Study Course Cryptocurrency Tax Secrets and gave a coaching class on it this past week. Boy, are there a lot of questions.
We have a little guidance from the IRS (very little, in fact), a change thanks to the Trump Tax Plan and educated guesses for the most part. There are clearly some things that do NOT work. One of those is doing nothing. The IRS successfully subpoenaed Coinbase for their records and received over 14,500 records of customers who had over $20,000 USD in crypto transactions in a year. At the same time, 809 people reported transactions. Clearly a lot of people aren’t reporting. This is just the beginning. Once the IRS strikes gold with this list, and they will, they will have proven this is an untapped market of audit gold. My prediction is that they’ll go after other exchanges and ask to have the $20K limit removed.
Look out. Hiding won’t work. Lying won’t work. You must legally report and pay taxes. There is good news. If you are using a few of the strategies that we talk about in Cryptocurrency Tax Secrets, you’ll pay less tax.
Since the Trump Tax Plan devastated investment expense deductions (for the most part, they’re all gone), paper investors are discovering there aren’t a lot of options. It’s even worse for traditional tax planning and crypto. You pay more tax and lost your deductions.
It all starts with discovering what is taxable:
If you sell crypto for fiat currency (USD), that’s taxable.
If you trade one crypto for another crypto, that’s taxable.
If you use crypto to buy a good or service, that’s taxable.
If you receive crypto from a fork, that’s taxable.
If you receive crypto from your mining activities, that’s taxable.
One of the tax strategies I talk about is using the Trader Tax Status. If you are considered a “trader”, you can take a deduction for all of your expenses on Schedule C. That could include your computer, printer, cell phone, education, home office, trading software and more! Of course, you have to prove that the expense has a business purpose and that you actually paid for it.
You qualify for TTS if:
Volume: Three to four trades per day. Don’t count the times when a cryptocurrency exchange breaks down an order into multiple executions.
Frequency: Trade executions on 75 percent of available trading days. If you trade five days per week, you should have trade orders executed on close to four days per week.
Holding period: In a 2013 case, the U.S. Tax Court required an average holding period of fewer than 31 days.
Hours: At least four hours per day, including online research and administration.
Taxable account size: Material to net worth, and at least $15,000 during the year.
Intention to make a primary or supplemental living: You can have another job or business, just show that you do intend to eventually make a living with it.
The Home Study Course is only available as part of my Coaching program right now. The cost is $67/month. Please note that is the price NOW. If you wait, you may pay more because the price is increasing. Once you lock in at a price, you won’t ever get an increase as long as you maintain your membership.
There are two coaching sessions a month. Most are accompanied by a written Home Study Course that retails for $99 – $149. You get TWO of those each month for just $67. You will also receive two free group coaching sessions. I’ll talk about the current topic and answer your tax, accounting, cash flowing creating, business building and asset protection questions. Find out more at https://www.ustaxaid.com/coaching-program/