This year has been unsurpassed. Now that the end is approaching and we are looking at the prospects for a better year 2021, it is time to think about taxes. While there are many other important points in 2020, there are some tax points to taste and some to fear.
profit and loss
It is difficult to look at cryptocurrencies and 2020 without commenting on P&L. Bitcoin (BTC) is inflated, which pleases many investors. Of course, if you are short, you are less satisfied. And if you’ve invested in XRP, the news that the US Securities and Exchange Commission is dissatisfied with XRP has had some impact on prices in an undesirable direction. These changes are important in terms of real and perceived value and purchasing power. What about taxes?
On the subject: SEC vs. Ripple: Expected but undesirable development
Tax day delay: Are the tax authorities more forgiving?
Tax returns for 2020 are due on April 15, 2021, which is not so long ago. Do not expect a delay like last year. In 2020, the tax authorities gave us all a 90-day period to submit returns and requests for payment until July 15, 2020 (IRS notice 2020-17). The world may still be in COVID-19 during the next tax registration season, but most observers do not expect the same offer from the tax authorities when it comes to tax registrations in 2020.
The same can be said for the tax authorities, which enables many of its operational activities. In early 2020, IRS Commissioner Chuck announced the Right People First Initiative. Do you need to pay taxes in installments? The tax authorities will help because it has an outdated payment process. In addition, installments from 1 April to 15 July 2020, as well as tax rights and fees are suspended. Even new passport certificates, with arrears exceeding $ 50,000, were expected, and most new tax revisions were also expected.
What about early 2021? Many IRS employees still work largely externally, but do not assume that this means that you will end the early or mid-2021 recession that taxpayers experienced in 2020. This is unlikely. How about arguing with the tax authorities or in court that you should not pay the tax authorities fines because the pandemic has affected you negatively? You can try this, but the IRS commissioner has already actively lobbied for proposals that the IRS have a dedicated pandemic permit for sanctions. Again, do not get your hopes up.
IRS crypto tax forms
Two years ago, the IRS made cryptocurrency a kind of tax problem for everyone by adding a question to the tax return for everyone, and the same thing happened with the tax return for 2020. This means that starting with the 2019 tax return that was submitted in 2020, the tax authorities put you ahead . A simple question:
“Have you received, sold, sent, exchanged, exchanged or acquired any financial interest in any virtual currency at any time during 2019?”
It’s very simple: yes or no; This does not require numbers or details, although they will appear on another tax return.
This 2019 supplement continues with the 2020 tax return you submitted in 2021. You should actually expect this to be a standard feature for future tax returns. Since the IRS classifies cryptocurrency as real estate, sales will be either profit or loss, and the yes or no square can be very important. In fact, given the IRS’s track record of offshore bank accounts, this could even mean severe fines or even jail time.
The tax service of the Ministry of Justice has successfully proven that it is simply not possible to tick the box next to foreign bank statements. Deliberate failure to comply with the requirements leads to increased punishment and increased threat of criminal investigation. The IRS’s criminal investigation department even meets with tax authorities in other countries to share data and enforcement strategies to find potential tax evasion of cryptocurrencies. This seems to remind us of the foreign bank account question in Table B.
If a taxpayer answers “no” and then discovers that he has been involved in cryptocurrency transactions for a year, the fact that he answered “no” directly to this new question (threatened with perjury) can be applied to them. What if you had some sort of “signature authority” over cryptocurrencies owned by your inexperienced parents or other relatives? This will help them manage their cryptocurrencies.