Think Cryptocurrency Is Confusing? Try Paying Taxes on It
“I’ve lost sleep over it,” said Shaun, a trader who said he was still figuring out
how to properly account for last year’s cryptocurrency profits on his taxes.
They’re afraid that the windfall profits created by last year’s cryptocurrency boom, which sent currencies like Bitcoin
and Ether skyrocketing and created a new class of crypto-millionaires, have left them with huge tax bills.
With this year’s April 17 tax filing deadline fast approaching, many virtual currency traders are sweating over their tax returns.
When they find out they owe taxes on their cryptocurrency trades, she said, “a lot of people are kind of shocked.”
Part of what makes paying cryptocurrency taxes so difficult is that current I. R.S.
Last year, Happy Tax opened a separate cryptocurrency division, Crypto Tax Prep, which already
has several thousand clients and is the fastest-growing segment of his business.
“Now they’re stuck with these huge tax bills, and they don’t have the capital to pay it.”
Faced with such problems, some cryptocurrency traders have decided to avoid the issue
entirely, by not declaring any cryptocurrency on their taxes and hoping for the best
Mario Costanz, the chief executive of the tax preparation firm Happy Tax, told me
that an influx of cryptocurrency trading clients had helped his business more than triple in the past year.