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Cryptocurrency Myths That Can Land You Into Trouble With IRS

Cryptocurrency is an evolving but disruptive technology, and in the same way, laws regarding cryptocurrency are also evolving. However, since 2014, cryptocurrencies have been taxable have been ruffling quite some feathers reports

The common myth associated with cryptocurrencies is that it is not quite taxable and anonymous. As a result, it has made cryptocurrencies a favorite of drug peddlers and terror organizations to fund their nefarious designs. However, today Cryptocurrency transactions are transparent and within reach of security agencies and law enforcement authorities.

The ambiguity and the obscure regulations about cryptocurrency taxation have led to several myths, sometimes with dangerous consequences. These misconceptions can land the investor in trouble with IRS. The United States Internal Revenue Service (IRS) has formulated regulations regarding taxation on the use of digital assets. It is also a myth that the IRS cannot track unscrupulous practices.

Common Cryptocurrency Tax Myths

The most common misconception is that crypto compensation is not taxable. Any investor when he receives payment for any goods or services rendered in the form of crypto, the IRS considers the income equivalent to cash compensation. Therefore the standard income tax rules apply.

The cryptocurrency’s Fair Market Value (FMV) will be regarded as on the date they received the gross income. Another misconception is that IRS cannot track crypto investors since they are anonymous. However, if it is willing to get you, the IRS can follow you. Bitcoin and ETH are difficult to track but not impossible, and IRS has invested heavily in software to track crypto assets, and it is also keeping a close watch on the dark web.

Gist Of The Story

The gist of this write-up is that investors must treat crypto assets like property and keep this fact in mind that the IRS will tax them regularly reports Suppose investors find it too confusing to handle. In that case, it will be better to leave the calculation for an authentic and professional consultant who can advise them to make the big decisions that may impact the taxes.

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