Majority of Bitcoin Investors Not Deducting 2018 Losses from Taxes, Claims Recent Report
It’s no secret that many relatively new investors in the cryptocurrency markets have seen massive monetary losses that have resulted from the persisting bear market that first began in late-2017 when Bitcoin began falling from its highs of nearly $20,000.
The realized losses that resulted from this drop, however, are tax deductible in the United States, but figures from a recent report signal that most investors who sold their Bitcoin for a loss are not deducting it from this year’s taxes.
Report: U.S. Investors That Have Sold Their Bitcoin Have Losses of Nearly $1.7 Billion
The report, which was conducted by Qualtrics on the behalf of Credit Karma, surveyed over 1,000 American investors in late-2018, and gathered data about realized losses from previous estimates regarding how many individuals had invested in, and sold, their Bitcoin for a loss.
The report unsurprisingly notes that many investors don’t consider the fact that selling cryptocurrency, for a profit or for a loss, is a taxable event, and failure to report it could lead to audits that result in investors having to pay penalties and interest.
The survey explained that of US investors who have lost money selling Bitcoin in 2018, their combined realized losses are approximately $1.7 billion, a massive number by all standards. The unrealized losses of Bitcoin investors who have not yet sold their cryptocurrency is even higher, coming in at an approximate $5.7 billion.
Many Investors Have No Plans to Report Any of Their Bitcoin Profits/Losses
Moreover, the report also noted that more than a third of investors have no plans to report either their crypto gains or losses.
“Only 53% of American bitcoin investors plan to report their bitcoin gains or losses on their taxes, while 19% haven’t made up their mind yet. Separately, more than a third (35%) of investors who sold at a loss don’t plan to report,” Credit Karma explained.
The report further notes that of the 35% of investors who don’t plan on reporting their losses, more than a third falsely claimed that they aren’t required to report any of their gains or losses related to trading and/or investing in Bitcoin.
“Of U.S. bitcoin investors who don’t plan on reporting, 35% falsely believe they aren’t required to report their bitcoin investment gains or losses,” the report explained.
This could be, in part, due to the fact that there is significant unclarity regarding how investors should report their cryptocurrency transactions, which is proven by the fact that over half of all the Bitcoin investors surveyed didn’t even realize that they could claim a deduction for their realized losses, and over 20% said they didn’t know how to go about reporting realized and unrealized profits/losses.
Until the Internal Revenue Service (IRS) begins cracking down heavily on individuals who don’t report their cryptocurrency trading activities and offers investors increased clarity regarding how to report their profits and losses, it is likely that many investors will continue to avoid reporting Bitcoin-related transactions.
Featured image from Shutterstock.
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by Cole Petersen on January 17, 2019 at 05:30AM