7 THINGS YOU SHOULD KNOW ABOUT CRYPTO CURRENCY TAXES

 

With the heated discussion about crypto currency and block chain lately, the topic of taxes and financial impact has perked up. The crypto currency continues to gain traction in everyday life. However, there is still no solid guidance and adequate advice for tax professionals. With different theorize, here are seven things you should know about crypto currency tax.

 

1) The two tax forms. Majority investors in crypto currency are investor themselves.  To report on digital trades, they use Sales and Other Dispositions of Capital Assets Form 8949. They describe the assets they’ve traded along with the dates they acquired and sold it. They also include things such as the cost of doing the trade, how much they made, and their net gain or loss. Other than that, the form is also distinguished in short-term and long-term capital gains and losses.  The second form concerns crypto trades is Form 1040 Schedule D.  This has short-term and long-term gains and loss with the going off information from Form 8949.

 

2) As the IRS confirmed, value of $600 or more done through virtual payment, which includes wages, annuities, rent, salaries, and compensation, it must be reported to the IRS. If there are no independent contractors, it must be reported on Form 1099-MISC by using the fair market value on the date of payment.

 

3) Crypto currency can also be subjected to income tax. This is for the miners who are paid through bitcoins for their work which makes it eligible for income tax. Mining also can be qualified for self- employment which also requires self employed tax.

 

4) All crypto currency sales and trades are taxable. You have to report all your gains and losses on your trades to the IRS. If you are exchanging a crypto currency for another one is also taxable. This includes converting it back to USD or spending crypto currency. 

 

5) The IRS is more focused on keeping tabs on every trade. It was reported that over $20,000 was traded without proper taxation. If you try to avoid crypto currency tax or indulge in other forms of fraud, you can be sentenced to a maximum sentence of five years in prison or a maximum fine of $250,000. If you are not filing for crypto currency taxes, the IRS is sure to keep a very sever watch on your activities. 

 

6)  The crypto currency tokens are potentially tax free. With the upgraded crypto currency guidance by IRS a lot has changed in crypto currency space. The crypto currency that represents a service or asset and not a currency do not come under federal law tax. This it is a virtual currency that has equivalent value in real currency or act as a substitute for real currency. However, it is best to consult a qualified and certified accountant or lawyer before making any decisions regarding what you choose to include or exclude from the crypto currency taxes.

 

7) Paying taxes for crypto currency is like paying any other type of capital gains or income tax. However, there is one major difference. It is up to the investors to compile the information themselves. This needs planning and recording over thousands of data. You need to determine if you are a trader, employee or a crypto currency miner first. 

As for now, the finer details of the crypto currency tax are not known. Many of IRS’s stands on certain status are not unclear. However, it can be assured that sooner or later, like most tax related issues, it will become more clear and simple for the public to understand. 

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5 TYPES OF CRYPTO CURRENCY ENTREPRENEURES YOU SHOULD KNOW ABOUT

There are five kinds of digital money you can group under advanced money. These are critical for digital money financial specialists to figure out the resources you are putting and the primary spots. These determine they determine what you’re investing in and who can invest in the first place. From coins to tokens, stable coins to utility and security tokens, here are the primary kinds of cryptographic money you have to think about.

1) Coins and tokens: this is the biggest distinction in crypto currency. It is important to note that every crypto currency has either one or the other. The biggest and the most important difference between coins and tokens are that Coins have their own blockchain and Tokens do not. Major companies in crypto currency like Ethereum, Bitcoin and Ripple are coins. There is a decentralized, distributed system that records exchanges on a computerized record as they have their own blockchain. Unlike coins, tokens do not have it’s own blockchain. As for token creation the Ethereum blockchain is the most prominent stage. However you can hypothetically make a token on any blockchain. 0x (ZRX), Maker (MKR) and Basic Attention Token (BAT) are examples of ERC-20 tokens. They are a specific type of Ethereum-based token. At the end of the day, their convention exists ‘over’ the Ethereum blockchain.

 

2) Coins can function as currency while tokens represent access to a product or stock. Coins can serve as a currency as they have their own blockchains. This can be a mean of exchange within the network. Thus the name digital gold is given to Bitcon. On the other hand Ripple is known for their quick exchange.  It’s simpler to change over USD to a coin instead of a token it is easier to change UDS to coins instead of tokens. Trading USD for a coin requires putting resources into a token as a rule. 

 

3) Utility tokens and security tokens: it is really important for investors crypto currency companies and the government to understand the difference between these two. The SEC has much stricter rules and regulations for security tokens than it does for utility tokens. This is because they can be digital securities. Most tokens are utility tokens.  Buying or trading without being an accredited investor in token crypto currencies makes it a utility token. This indicates exclusive access, a discounted rate, or even an early access. If it is a smart contracts and DApps, it can be a utility token.  Basic Attention Token indicates attention, not stock or currency which makes it a utility token. Anyone can trade utility tokens on a crypto currency exchange

 

4) Like securities, security tokens represent part-ownership in a tradable, real-world asset external to the blockchain. They are different from utility tokens.  There are accredited investors to participate in STOs as security tokens are regulated by the SEC like securities. However, investing security tokens are a bit more difficult. To invest, you have to use a token issuance platform for tokenized security. You also need to fulfill a number of requirements. Through KYC, you need to have your accredited investor status confirmed. The profile created will show hoe and hoe much one can invest. 

 

5) Stable coins are actually stabletokens as they don’t have a blockchain. They can be passed off as traditional assets like fiat or gold. Crypto currency investors can move their money from volatile crypto currency to stablecoins instead of converting it back to USD. However, the value can also vary. Most are USD, nut not all. 

The distinction between the crypto currencies continues to become more blur with the development of new applications for digital currencies.

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5 REASONS THE CRYPTO CURRENCY IS DOWN

The crypto currency market is down and that is not surprising news for everyone.  But the market has been down for a pretty long time. Therefore, it is expected that people would feel that there is no actual real value in this, which, is not actually true. Crypto currency is not backed by anything. However, this is not the real reason why the market is crashing. The sector faces significant growing pains and considerable public opinion crisis and fraud issues. But there must be certain main reasons why the crypto currency is down for such a long time. Here is a list of five main reasons why the crypto currency is down. 

1) Public’s opinion that the crypto currency is a short term investments

Let’s face it. It is not a straightforward way to make money in this sector. Now, this can raise some concern about how genuine this whole thing is. But as for investments, people want to invest in sector that are more straightforward and feels genuine and safe. Because of Institutional investing in crypto currency, most investors are millennial who view crypto as a short term investment. This is the reason why unlike other assert classes, people typically don’t include crypto currency in their potential retirement plan. When people want quick returns, they get in and out of the market, thus making it volatile. 

 

2)  Widespread market manipulation

The “pump and dump” scheme by the major part of the investors is one of the major reasons for the market crash. This means inflating a crypto currency’s value only to sell it off at its peak. This does makes quick profit for the investor, but does affect the market. It is easier to accomplice especially with smaller market cap crypto currencies. Exchanged have different levels of liquidity which in turn impacts how they price their crypto. Crypto currency is decentralized which means it is not a centralized entity like a bank or one which the government can control. Only supply and demand determines its price and it differs widely. However, this manipulation is not limited to small cap companies. 

 

3) Making money Is less straight forward 

Crypto currency adopters used to either capitalize on ICOs (Initial Coin Offerings). This was done by getting in early and getting out, mining and holding crypto currency for long periods of time or by day trading. However, these days, none of these methods can guarantee you a fortune. Because of more competition and difficulties in the Bitcoin mining, hash rate required to mine isn’t always worth the high electricity bill. Day trading is much more difficult in a bear market which is as unpredictable as the crypto currency market. 

 

4) Raising cost of mining

Bitcoin is dependent on a system of miners. This verifies transactions and records them on a digital ledger which is called the block chain. The miners are rewarded in Bitcoin as a reward for their time and energy involved. However, the price of mining keeps increasing with the increasing work. With the heavy price and high electricity bill, mining operations re shutting down  as bitcoin’s declining value has made mining less profitable.

5) Security concerns

With hacks, exit scams and Ponzi schemes, bitcoins have gained a negative press image. Some even go to the extremes of calling ICOs frauds. This is the reason why investors have a meek trust in the crypto currency. Stealing funds from exchanges is rather easier. Exchanges cannot be trusted across the board. 

Crypto currency just needs a round of innovations for the investors to trust it more.

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BEST CRYPTOCURRENCY EXCHANGES

Once you familiarize yourself with Cryptocurrencies, the first thing you are going to look for is a valid and solid broker or exchange. There are two types of exchanges, Fiat Exchanges and Crypto to crypto exchange. It means, currency for cryptocurrency or swapping of cryptocurrency with cryptocurrency. Based on your needs you can list out which exchange you would go through. 

Whenever you have to choose your exchanges, look for 5 things: Privacy, Limits, Fees, Speed and Reputation

KRAKEN

Kraken is an exchange based in United States and was established in 2011. The fee charged by Kraken ranges from 16% for the seller and the taker will range up to 26%. You can deposit USD, EUR, CAD and other currencies. They also allow the deposit of cryptocurrency if you have any. 

 

Kraken offers a leverage up to 5x. Kraken uses an intuitive interface and will allow amazing levels set for the investors. The margin trade will hence shoot to 5x. it also offers a wide variety of cryptocurrencies and is supported globally. 

 

CEX.io

CEX.io is a London based exchange. It offers features like high security, liquidity and cross platform trading. The site offers great support service and is user friendly. It offers a lot of fiat currency pairs to trade.

 

The site is registered and secure. It has registered with FinCEN in the USA while obtaining 2 DSS certificate of high level security. Bitcoins, BitCash, Bitcoi Gold, Ethereum, Ripple, Dash, Stellar etc. are some of the cryptocurrencies available. 

CEX.io enables various methods of payment. It accepts VISA or mastercard, bank or wire transfers. Like every other exchange, you will have to verify yourself as a user. With every level of verification, you will be given extra features to use. 

 

Bithoven

Bithoven is one of the fresh entry in this industry. In spite of being a newbie in the cryptosphere, its features and algorithms have impressed the audience significantly. The user interface is perfectly suited for beginners as well as professionals. It has basic as well as advanced statistical tools. It offers analysis and candlestick charts which could be followed by beginners. 

 

Bithoven supports over 350 altcoins. There are absolutely no purchasing and selling limits. It has one of the best customer services and live chat support. Bithoven is backed by one of the most renowned and trusted experts who are also users. The industry is expecting it to grow while Bithoven is ready to release new features. 

 

BitPanda

Bitpanda was started in Australia and has a lot of investment opportunities. The swapping or exchanging of cryptocurrency through this broker is free of cost and instant. You can enable notifications to alert you about the price. Bitpanda will send you an email and notify you about the price. 

 

Bitpanda is a very famous exchange which allows you to purchase cryptocurrency with USD, Euros, B ritish pounds and Swiss Francs. It follows a two factor authentication and uses SSL encryption. It has a user interface which is very user friendly for beginners. Beginners will definitely have fun and will understand how to analyze, buy, sell and trade stocks. 

 

GEMINI

Gemini was started in New York. It rapidly developed and delivered the image of one of the most reputed and a reliable exchange. It is the 39th largest exchange with a 24 hour volume quotation. 

 

The security is very tight. The software is coded in a way that it holds only a specific amount of cryptocurrencies online while holding the others offline. Every US dollar invested or traded is secured by the Federal Deposit Insurance Company. This means, Gemini is fully registered with the banking standards. 

 

It offers a very generous customer support and proper guidance to novices. It is well designed with features which can be used by professionals as well as newbies. It charges very low commission or fee. In fact, the bank or wire transfers are free of charge. 

 

CoinHouse

This is one of the most simplest exchange you are going to find in the industry. You can buy bitcoins using Euro and can also trade in bitcoin futures . Bank transfers or credit cards are accepted. Coinhouse gives you a feature which will let you store your coins for a limited period before you transfer it to your digital wallet. However you have to be a premium member to enable this feature. 

 

They provide analysis about market risks given from experts. They will display risks and opportunities of every investment you want to know. They charge very low commissions

 

There are a lot of things that can be said about different exchanges. Every exchange is developed and desgined in a different way. All of them have their unique features and their drawbacks. Some might have every single thing that an investor would thrive for but would fall back on security. Picking the right one is tricky sometimes, but you come to know once you use and familiarize yourself with it. 

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