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Don’t Overlook the FBAR Requirement When Filing Cryptocurrency Taxes

With tax season upon us, cryptocurrency enthusiasts have a lot to take into account. For one thing, it seems there are some details which most people may not be aware of. Failing to comply with these requirements can lead to a jail sentence, though, so it’s important to keep these things in mind at all times.

It’s Cryptocurrency Tax Season

Filing taxes is always a bit of a difficult task when it comes to cryptocurrencies. It is quite difficult to fill out everything unless one uses specialized software for this specific purpose. Thankfully, there are quite a few tools available to help out in this regard, although that is only the first step to take when it comes to filing taxes.

It seems there is a lot of confusion regarding owning cryptocurrency which is stored offshore. A lot of American cryptocurrency users rely on non-US exchanges for either Bitcoin or altcoins. Any money held abroad must be disclosed to the IRS and the US Treasury. Anyone failing to do so will face a hefty fine and a potential jail sentence as well.

Unfortunately, this poses a big problem for cryptocurrency users. Since users who purchased cryptocurrency for the first time last year may not even be aware of this requirement, it is very possible they will face a lot of repercussions due to this “hidden rule”. As soon as you store over $10,000 worth of cryptocurrency abroad in any form, it must be disclosed in one’s Report of Foreign Bank and Financial Accounts (FBAR).

Additionally, these foreign holdings need to be disclosed on Form 8938, which is how people typically file their taxes with the IRS. Although this sounds like a rather trivial matter, a lot of people tend to forget these things, mainly because they aren’t aware of them. With the IRS defining cryptocurrencies as property, holders will need to pay taxes at their capital gains rate. This also applies to foreign trading platforms, which poses a lot of new questions.

The biggest question is how this affects US citizens who buy cryptocurrency on foreign exchanges. Right now, tax professionals are divided on this front, as it is possible that there is an FBAR requirement. Even so, it does not appear to be mandatory, and it is something the US government will need to address sooner rather than later. No one can expect taxpayers to be in the loop on all things related to tax filings and cryptocurrencies.

It will be quite interesting to see how all of this plays out for US taxpayers. After all, if that is indeed an official requirement, the IRS direly failed to communicate this vital piece of information. A foreign exchange can be considered a reportable foreign account for FBAR. Now is a good time to talk with your accountant or tax man and see if they can help you file such a document before tax day. It’s not worth risking a jail sentence over; that much is evident.

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At press time, the father of crypto has dropped by roughly $100 and is trading for approximately $6,680. Overall, this has been a relatively positive week for the master of cryptocurrencies. While the price may be down for the time being, the asset did manage to retain its $6,700 price range for several days. This is big news considering how often the currency has dropped to the low $6,000s following a small bull run. In addition, analysts do expect it to clear the $6,800 resistance line by next week, so enthusiasts have a lot to look forward to. From a legislative point of view, bitcoin may be trapped in limbo. As we reported yesterday, the Securities and Exchange Commission (SEC) has decided to postpone its decision regarding the approval of a potentially new bitcoin ETF from the VanEck SolidX Bitcoin Trust. The decision had originally been moved to September 30, next weekend to be exact, but has since been “relocated” to late December. The good news, however, is that the SEC is taking time to fully understand the project and the circumstances at hand before rendering a “yes” or “no” answer. They haven’t responded in the negative; they are simply looking for additional commentary from industry experts to make sure the ETF has traders’ best interests in mind. This is a good thing, and a decision postponement should not be what causes interest to die down. Bitcoin has managed to remain in the high $6,000 range despite this news, which shows further evidence of growing maturity. However, it does appear to be moving in a “sideways” direction. Though its avoiding bearish pullback, trading in Asia ultimately saw very little action on Sunday morning. This behavior was repeated in Eastern Europe, and its present price is believed to be the result of actions by long-position traders. Overall, trends suggest that the price is going to continue moving upward – at least for now – though movement could be slower than investors might like thanks to hardcore resistance levels bitcoin will probably encounter in its upcoming ascension. If bitcoin can surpass its present resistance, we could wind up witnessing $7,000 once again. However, if bitcoin were to fall below current support levels, the entity may find itself trapped at $6,500. In a recent discussion regarding bitcoin and the technology behind it, venture capitalist Tim Draper explained: “It’s so important for everyone. This is the beginning of something that’s bigger than the internet ever was. The internet went after information, communication, gaming and entertainment. They are all $10 billion to $100 billion-dollar industries. Maybe [one or two are] trillion-dollar industries.” Bitcoin Charts by TradingView The post Bitcoin Price Watch: Price Falls, but Trends Remain High appeared first on NullTX.

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