2018 was a tough year for the cryptocurrency market, in general. The entire capitalization shrunk from more than $800 billion to about $120 billion, undoubtedly causing a lot of people to sell their cryptocurrency at a loss. And while a deduction for a Bitcoin tax refund is possible, this expert holds it might be rather challenging to handle it alone.
Bitcoin Tax Refund
The Internal Revenue Service (IRS) of the US requires individuals to pay taxes on capital gains made from trading cryptocurrencies. Respectively, individuals can also deduct their losses on their tax form.
The latter reduces the overall amount of taxes that people owe and increases their eligibility for a potential tax refund.
This could be a lot easier on papers, though, as accounting expert Jake Benson says that filing for a Bitcoin tax refund is quite challenging and oftentimes requires the assistance of a professional.
The major obstacle in front of individuals is determining the cost basis. This is the price of the cryptocurrency at the moment of the purchase. On the matter, Benson says:
The burden is left upon the fund or the individual that’s trading to track cost basis, and this is extremely challenging. […] Some customers track their cost basis, some rely on proceeds, and it’s a really challenging scenario.
Indeed, failing to handle your taxation right could cause a lot more headache than one would imagine. Earlier in 2018, a Reddit user r/throwaway283291 shared his story on how he ended up owing $400k in taxes after being up with over $800,000 from cryptocurrency investing not long before that.
The Tumultuous 2018
2018 was a year of serious decline in the prices of cryptocurrencies across the board. Bitcoin (BTC) itself is down over 75% since its all-time high (ATH) value in January 2018.
In fact, My Bitcoin News reported that Bitcoin’s price is on track to set a new downtrend record as in a few days the current decline in its price would be the longest since the one between December 2013 and January 2015.
The entire market saw massive losses, shrinking from over $800 billion to less than $115 billion at the time of writing this.
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