New investors in Bitcoin are faced with large capital gain taxes from the profit they made in 2017. Reports show that they are now selling off quickly before they file their April taxes.
Remember in 2014 that IRS made an announcement that cryptocurrencies are defined as property and not currency.
ARK Invest CEO highlighted that “those who have never paid taxes before are shocked. Most people gained a lot from cryptocurrency last year but currently,do not have enough cryptocurrency to pay taxes for their last year’s gains.”
Online Taxman.com founder, Vincenzo Villamena said that people have realized that they are stuck with large tax bills. They are either preparing to pay or selling off the cryptocurrency.
If an individual buy and sells Bitcoin within the same year, the person will be taxed on short-term capital gains which can be as high as 39% depending on the tax bracket.
Airdrops and Bitcoin mining are also being taxed. However, they are taxed as ordinary income, and so the rate depends on the Individual’s tax bracket.However, when a person holds on to Bitcoin for more than a year before selling, it will only be liable for what the IRS refers to as long-term capital gains. The rate for this kind of tax is significantly lower from about 15 to.23.8%.
Is this taxation cruel on investors? Let us know in the comment box below.