Cryptocurrency marks a paradigm shift in the reign of payment for goods and services. With the passage of time, more people went to trust Cryptocurrency in making transactions.
Such is the growing popularity that several countries are even contemplating accepting Cryptocurrency as a legal tender.
However, the news that the Government has decided to charge Tax on Cryptocurrency has now brought in fresh concerns about the business.
If you are a greenhorn in Crypto trading, you need to keep track of these latest developments. This will help your trade confidently on those Bitcoin investment and trading platforms like the bitcoin buyer platform.
In this article, we are going to discuss the decision of the Government’s move of taxation on Cryptocurrency trading.
Crypto and Taxation
By this time, you are already aware regarding the Government’s decision to charge taxes on Cryptocurrency trading.
It is a general understanding that you need to tax the apex authority if you earn handsomely in a country. This needs to be taken as a government obligation.
You already know that people turned from rags to riches when they traded on Cryptocurrencies.
For example, if you purchased Cryptocurrency from the exchange for a mere dollar, there is potential that you might end up earning millions by 2017.
And that’s a reality.
Well, it could be otherwise also that you turn empty-handed. Therefore the volatile factor is highly present with Cryptocurrency.
If you are a UK resident, you are entitled to pay taxes on profits over 12,300 pounds. So with Cryptocurrency, you have a high chance of becoming moneyed at no point in time, so why not pay taxes?
Things That You Need To Know
Since you are trading on Cryptocurrency, the government will be unable to trace it because it is decentralized.
- But while you file your return, you need to fill up a form called Form 1040. There you will be asked whether or at any point in time, you have acquired Cryptocurrency.
And you cannot simply duck the question at any point in time.
- One more thing that you need to remember is that you must not avoid tax even if you don’t get Form number 1040. You need to know about the fresh norms of Government. Crypto traders who will be starting Cryptocurrency will have to pay a greater tax compared to the present value.
- The gains and profits that you are trading will be treated as taxable. You are going to pay an ordinary tax for assets that are held for less than one year.
But if the profits are bigger than that of the assets held, you might be taxed. In addition, you will have to pay long-term capital gains (0,15,20 percent).
- If you gift somebody in Crypto, it will be traits as other gifts in the same year. So like, if you are gifting somebody amounting to more than $16,000, you will be taxed for sure.
- Inherited Cryptocurrency has to be treated like common inherited assets.
The government has made things simple and easy to ensure that they pay taxes without corruption.
Tax On Cryptocurrency: Right Decision?
Cryptocurrency, due to Blockchain technology, is found to be highly safe. It is also decentralized. So no organization can track what or how much you are trading.
This advantage incited thousands to invest in Cryptocurrency. Now that you have to disclose information before the government, you lose the secrecy.
But if looked at from another aspect, Cryptocurrency is turning out to be a valid payment method with time.
Organizations like Shopify and online casinos have started accepting Cryptocurrency in purchasing goods and services for a number of years now.
This familiarization is now a welcome move, though payment of goods and services in Cryptocurrency is vastly different from that of digital trading currency.
It could thus be concluded that the government needs to tax Cryptocurrency. This is because Cryptocurrency is becoming widely popular and is close to becoming a legal tender in the days to come.
So why this hide and seek?
Just for the sake of clarity and transparency, Cryptocurrency needs to be taxed under the laws of the land.
This will be beneficial to the individual as well as the nation in the long term.