Where you reside will depend on the regulations of cryptocurrency taxes you could owe for investment revenue. Investors should ensure that they are following all government guidelines when it comes to reporting assets during the tax season. You do not want to face a government audit regarding your digital assets.
The IRS in the United States is Stepping Up Cryptocurrency Tax Audits
Investors should be aware of increased efforts from the IRS in the U.S. regarding tax evasion with digital assets. Cryptocurrency taxes are a hot topic right now with the fluctuating economy, so the focus has been amplified. The IRS is asking cryptocurrency tax software companies to aid in the investigation of those who aren’t following specified laws. These stipulations surround investment gains or losses, and any discrepancies reported.
Cryptocurrency taxes are due on July 15, 2020, in the United States, but extensions could be available for investors. If you need more time to complete your records, then it’s important to get in touch sooner rather than later. There are no hard facts to debate that extensions increase or decrease your chances of an audit as some fear.
Authorities in Australia Have Sent 350,000 Tax Notice Letters
Before the 2nd quarter of 2020 came to an end, individuals began seeing tax notice letters from Australian tax authorities. Cryptocurrency taxes are getting more attention lately, especially during this uncertain economic time.
Some Regions Do Not Require Cryptocurrency Taxes
It is essential that you check your place of residence on the current cryptocurrency tax regulations. Not every country has the same laws and procedures that the U.S. and Australia do. For example, South Korea has released a statement earlier this year regarding current cryptocurrency taxes. Any gains from digital investments of cryptocurrency are not taxable under the law.
Portugal is also one of the many countries that allow trading and crypto activity without any taxation. Although according to this law, there are some exceptions that residents should be aware of.
• Crypto tokens accepted for commercial activities are subject to sales tax
• Professional activities involving cryptocurrency falls under some taxation
This shows how important it is to check with local tax authorities to ensure you know exactly what is required.
How to Prepare Yourself for Cryptocurrency Taxes Filing
By following some simple steps, you will be ready when it comes time to file the documents for cryptocurrency taxes. If you are organized, it will be no effort at all to compile everything needed when the time comes.
• Keep records of every transaction within an exchange platform
• Keep records of any received cryptocurrency
• Calculate any gains or losses
• Report any losses to save money in cryptocurrency taxes
• Utilize a tax specialist
Preparing for cryptocurrency taxes filing is quite similar to regular investment tax filing, but still needs to be completed properly. Quite often, investors are more comfortable with a professional handling all of their investment taxation information to save them time. How you wish to gather your information and file your cryptocurrency taxes is a personal decision.