FREE CONSULTATIONS & WE'RE AVAILABLE 24/7

Mar 28, 2018

Cryptocurrency IRS Tax Fraud Lawyers

The Spodek Law Group is a premier, and well known, tax fraud law firm. We understand what the IRS is looking for, and most importantly understand how cryptocurrency works. We understand the challenges investors face when it comes to reporting their cryptocurrency trades to the IRS and the potential tax liabilities associated with not reporting it properly. Regardless of what the reason, or issue is, we’ll handle the IRS for you.

There are numerous scenarios where the transfer or payment of Cryptocurrency can be considered taxable income. For example:

  • if you contributed computing resources and mined a full or partial cryptocurrency
  • you performed work as an employee and got compensation in cryptocurrency
  • you worked as a contractor who was paid in bitcoin
  • you run a business and accept bitcoin for goods and services
  • and many more

These are some of the more basic and common examples where Bitcoin is considered taxable income. All income is subject to income tax even if your employer doesn’t give a W-2, 1099, or other tax document.  In Notice 2014-21, the IRS announced the exact tax treatment cryptocurrencies will receive. Many people expected Bitcoin to be treated like other types of currency for tax purposes, but it wasn’t. Bitcoin and other currencies have to be treated as property for tax reasons. This is due to the fact that unlike traditional currencies, Bitcoin isn’t regulated or governed. As such, it’s treated like property. What this means is that the parties have to consider and account for gains which occur with Bitcoin. Failure to account capital gains can result in tax penalties. The failure to account for capital losses means you are paying more in tax than needed.

How should you account for cryptocurrency tax gains

Taxpayers should record the value of Bitcoin when they are bought, sold, transferred, etc. The difference in is capital gains/capital losses. This is recognized at the time of the transfer. It should be reported by completing Schedule D of the income tax return. This is then transferred line 13 of the individual tax return. Taxpayers should make sure to take account of capital gain and losses with cryptocurrencies. Failure to do so can result in tax penalties and interest accruing.

 

Some employers use bitcoin to pay employees or contractors. You have to make sure in this case that all employment and self-employment tax obligations are handled. Many employers and workers think that the form of the income can excuse them from payroll tax obligations. Employers have to withhold taxes for employees. Similarly, independant contractors have to make sure their self-employment taxes are paid. The failure to do so can result in fines and penalties.

 

 

Request Free Consultation

Testimonials

Request Free Consultation

Please fill out the form below to receive a free consultation, we will respond to your inquiry within 24-hours guaranteed.

Manhattan

85 Broad Street, 30th Floor
New York, NY 10005

Queens

35-37 36th St,
Astoria, NY 11106

Brooklyn

195 Montague St.
14th Floor,
Brooklyn, NY 11201

Manhattan

85 Broad Street, 30th Floor
New York, NY 10005

Phone

888-977-6335

Queens

35-37 36th St,
Astoria, NY 11106

Phone

888-977-6335

Brooklyn

195 Montague St.
14th Floor,
Brooklyn, NY 11201

Phone

888-977-6335