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US President Biden has released his budget proposal for the 2023 fiscal year and it isn’t all sunshine and roses for cryptocurrency in the States, despite local support from states like Florida, New York and Texas. Biden intends to impose mark-to-market rules to digital assets which are ‘actively traded’. This effectively means that investors are tax-liable for cryptocurrency gains that they have not yet realised by selling the asset in question. The above presents an hugely onerous obligations to investors which will surely push innovation and investment away from American shores. Biden dubs this the ‘modernisation’ of crypto regulations and expects the move would generate $6.6 billion in tax-revenue between 2023 and 2032. Furthermore, Biden wants to impose reporting requirements on US residents that hold more than $50,000 in offshore accounts. According to the Treasury, which expects the reporting tightening to generate $2.2 billion in revenue in ten years: "The global nature of the digital asset market offers opportunities for U.S. taxpayers to conceal assets and taxable income by using offshore digital asset exchanges and wallet providers," It is no secret that, as presidents go, Joe Biden is a big spender indeed. Though it seems foolhardy to force an emerging industry, like cryptocurrency, to shoulder to burden of his aggressive fiscal policy which is no doubt prompted by re-election pressures… https://decrypt.co/96270/biden-eyes-5-billion-2023-revenue-applying-new-tax-reporting-rules-crypto
Tax Tidbits From a CPA (US)Without doxxing myself, I've been a CPA (specifically, a tax accountant) in the US for about 10 years. Recently at my firm, I've been included in a small group of professionals forming a network of crypto tax consultants and specialists. As I truly love the crypto community, the best contribution to this sub I can think of is to try to 1) put together a few tax tidbits and 2) to answer every tax question that I can in the comments. Reading alot of comments and posts in the sub, I'm a bit concerned that my fellow crypto enthusiasts are going to put themselves at risk of the IRS by not fully understanding the extent of their activities. Now before I start answering, I'll add that anything I say should be used as a guide to either do further research on your own to understand your tax situation as it relates to crypto, or to acknowledge that your tax situation may be over your head and you should seek out a tax professional. There are tax resources such as koinly, and while I don't use them personally, I believe they are worth the investment - but I also want people to understand their own tax situation to make sure any paid service is handling your situation correctly. Without further adieu, here are a few items of general knowledge and feel free to ask questions below and I'll try to answer everything (I'm operating under the assumption this post will generate probably 25 comments, so if for some reason it blows up, be patient and I'll try to get to everything). This will also be entirely US specific, anyone outside of the US, I'm sorry but I'm in no position to give tax opinions. Your exchange, wallet, etc will likely not issue you a 1099-B for your trading activity, so don't count on getting any help from them, other than your transaction details. This won't be required for a few years and was part of the infrastructure bill. Every crypto you swap, exchange, convert, sell, earn lending/bonding reward, mine, earn staking rewards, receive airdrops on is a taxable event in the current year. To emphasize the point above, this includes MOONS. Yes, all of those MOONS you receive via karma distribution should be picked up on your tax return. Same as BAT rewards by using Brave. The value you pick up on any rewards, mining, staking, airdrops, faucets is the fair market value at the time of receipt. You should be tracking this on your own or using a service. The amount you pick up into income is now your basis. Basis is "cost". Mining is considered self-employment income and should be reported on Schedule C, which differs from staking which would be picked up as other income, along with the other items not including selling, swapping, exchanging. Sending a crypto from one wallet or exchange to another is not a taxable event - though you should track your transaction fees to include in your basis. NFTs are treated the same way as everything above. Keep good records. If you do not maintain good records or lose them and are not able to substantiate your cost basis, the IRS could make it $0, which would increase taxes you owe. Holding period can give tax benefits. If you sell something you've held for a year, it's a long term capital gain and is taxed at preferential rates. Less than a year is at ordinary rates. You are supposed to report the date purchased, date sold, cost, and sales proceeds of EVERY sell (exchange, sell, swap). Even if this results in $0 gain or loss. Wash sale rules don't apply, however, selling something and immediately buying it back for tax loss harvesting could violate economic substance rules and on audit, the loss could be disallowed (it would likely be incorporated back into your basis). Monero won't save you from paying taxes. Nor will boating accidents. You can trade crypto using crypto/bitcoin IRAs and the gains are tax free, but you can't pull out until retirement. I don't utilize these services, but they exist. That's what I can think of for the time being, I'll make an edit if anything else important pops into my head. I hope this and any questions provide some useful information to people in this sub. Best of luck to all! TLDR: Taxes are hard, if you don't have your arms around it, seek a professional and bite the bullet and pay. Feel free to ask tax questions below and I'll answer what I can. Source
Hitting them where it hurts... in the checkbook!!! Republicans have quietly imposed a new tax on churches, synagogues and other nonprofits, a little-noticed and surprising change that could cost some groups tens of thousands of dollars. Their recent tax-code rewrite requires churches, hospitals, colleges, orchestras and other historically tax-exempt organizations to begin paying a 21 percent tax on some types of fringe benefits they provide their employees. That could force thousands of groups that have long had little contact with the IRS to suddenly begin filing returns and paying taxes for the first time. Many organizations are stunned to learn of the tax Â— part of a broader Republican effort to strip the code of tax breaks for employee benefits like parking and mealsÂ Â— and say it will be a significant financial and administrative burden. It also means political peril for lawmakers, many of whom were surely unaware of the provision when they approved the tax plan. ChurchesÂ’ tax-exempt status, in particular, has long been considered sacrosanct and Republicans are relying on the faithful to back them in the November elections.Â Though many organizations are still unaware of the tax, more than 600 churches and other groups have already signed a petition demanding it be repealed.Â Â“ThereÂ’s going to be huge headaches,Â” said Galen Carey, vice president of government relations at the National Association of Evangelicals, an umbrella group of evangelical Christian organizations. Â“The cost of compliance, especially for churches that have small staffs or maybe volunteer accountants and bookkeepers Â— we donÂ’t need this kind of hassle.Â”Â The Jewish Federations of North America is looking at a new $75,000 tax bill this year because of the change.Â Â“A lot of people are just finding out about it and the more people find out about it, the more pressure there will be on Treasury and Congress to either delay implementation or consider changing this,Â” said Steven Woolf, senior tax policy counsel for the group. At least one Republican lawmaker is now proposing to rescind the tax, though House Ways and Means Chairman Kevin Brady Â— one of the architects of the Tax Cuts and Jobs Act Â— is defending the provision.Â It will simplify the code when it comes to how workers are compensated, Brady said through a spokesman.Â The debate comes as Republicans celebrate the six-month milestone of the lawÂ’s enactment. TheyÂ’ve emphasized the benefits of its big cuts in taxes on businesses and individuals.Â But to help defray the budgetary cost of those changes, Republicans simultaneously pared tax breaks for workersÂ’ fringe benefits, which is projected to raise around $40 billion over the next decade.Â They were mainly trimming deductions companies have long taken for entertaining clients and providing meals for employees. But Republicans also wanted to treat nonprofits equally, which proved challenging.Â Because those organizations donÂ’t pay income taxes, lawmakers couldnÂ’t take away fringe-benefit deductions. So instead they created a 21 percent tax on the value of some of nonprofit employeesÂ’ benefits.Â The main benefits affected are transportation-related, like free parking in a lot or a garage and subway and bus passes. It also targets meals provided to workers and, in some circumstances, may affect gym memberships.Â Â“The Tax Cuts and Jobs Act included provisions that provided grater parity in the tax treatment of different types of employee compensation,Â” said Rob Damschen, a Brady spokesman. Â“These provisions apply to both employers that are taxable entities and those that are tax-exempt entities.Â” Â“Providing this greater parity helps to reduce the extent to which decisions about the elements included in the employee compensation package are driven by tax considerations,Â” he said in an email.Â The proposal got virtually no attention when the legislation was making its way through Congress late last year, and many groups are outraged to now learn of the requirement.Â Â“What weÂ’re talking about is an income tax on the church for providing parking to its employees Â— thatÂ’s what weÂ’re talking about,Â” said Mike Batts, chairman of the board of the Evangelical Council for Financial Accountability, which is circulating the petition denouncing the tax. Â“It's absurd."Â He scoffs at the idea of treating businesses and nonprofits equally.Â Â“The whole idea of tax exemption for nonprofit organizations that are doing charitable, religious and educational work is for them not to be on the same playing field as for-profit businesses when it comes to taxes, in order to incentivize the good work they do to make our society better,Â” said Batts, who is also managing partner of an accounting firm that specializes in religious nonprofits.Â He and others complain that, thanks to nonprofitsÂ’ tax-exempt status, many donÂ’t have experts on staff who can help them understand the provisions. They also note that while companies also lost fringe-benefit breaks, they simultaneously got big cuts in their tax rates and new incentives for investments that more than made up for the lost deductions.Â Many nonprofits say they are confused over how exactly the tax is supposed to work.Â Churches and other groups want to know how they are supposed to go about calculating the value of things like parking spaces for employees. Some wonder if the garages provided as part of clergy residences are now taxable. Other nonprofits have their own questions.Â Universities want to know if the bus services they provide for faculty and students are taxable and how they figure out how much they owe. Orchestras want to know how to treat musicians who may perform in different locations.Â Â“At what point is something a travel reimbursement? And at what point is it a commuter benefit?Â” said Heather Noonan, vice president for advocacy at the League of American Orchestras.Â Treasury is now working on regulations spelling out the details of how the tax will work, though the groups are supposed to have already been paying the tax. It took effect Jan. 1 and nonprofits are supposed to pay it quarterly.Â A host of groups, including the Boys & Girls Clubs of America, Goodwill Industries, the YMCA and the National Council of Nonprofits are demanding the tax at least be delayed, saying it is unfair to ask them to be paying a levy they donÂ’t understand.Â Earlier this month, Rep. Michael Conaway (R-Texas) introduced legislation to kill the tax. https://www.politico.com/story/2018/06/26/republican-tax-law-churches-employees-670362