A tiny fraction of Americans are reporting their cryptocurrency transactions to the IRS, according to a study via Credit Karma Tax.
Fewer than 100 of 250,000 federal tax returns prepared along with also filed so far This kind of year through the company have filed a Form 8949 for cryptocurrency gains along with also losses, Credit Karma said Tuesday. that will’s less than 0.04 percent of filers.
“Generally, Americans with more complex tax situations file later inside tax season, especially if they expect that will they’ll owe money,” Credit Karma Tax General Manager Jagjit Chawla said in a statement. “However, given the popularity of Bitcoin along with also cryptocurrencies in 2017, we’d expect more people to be reporting.”
The company said 52 percent of its filers This kind of tax season are millennials, along with also just 14 percent are at least age 55.
Reuters first reported the study’s findings. Investor interest in bitcoin along with also various other cryptocurrencies surged last year, helping send prices several thousand percent higher.
The lack of cryptocurrency tax filings “emphasizes the difficulty in accurately reporting your crypto gains along with also losses,” said Brandon Williams, a former investment banker who has been independently trading cryptocurrencies for about the last two years.
Williams said he executes more than two cryptocurrency trades a day, along with also uses an online service called CoinTracking to record those transactions for tax purposes. The volume along with also volatility of cryptocurrencies means that will takes at least three or four hours every two weeks to note trading gains along with also losses, Williams said.
The IRS treats cryptocurrencies as property rather than a currency. As a result, a transaction such as trading bitcoin for another digital coin can be taxable since that will can be considered a sale of property for cash, which can be then used to buy the various other cryptocurrency. Income via creating bitcoin through the “mining” process can be also taxable, the IRS said.
Williams said that will would likely make more sense to him if cryptocurrencies were treated as currencies, along with also the designation as property can be “almost a deterrent in [the] pursuit of mainstream adoption.”
He said he will “obviously wait closer to April [to file] in case there’s more visibility along with also definition via the IRS about what would likely be acceptable.”
A representative for the IRS said that will did not immediately have anything to add beyond guidance published on its website.
About 1 million people filed taxes through Credit Karma when that will launched its free tax service last year, the company said. that will added that will makes Credit Karma the fifth largest e-filing service.
A survey via LendEDU along with also conducted by Pollfish in November found that will slightly more than a third of respondents were not planing to report their bitcoin transactions to the IRS. About 64 percent of the 564 American adult consumers who responded said they planned to report or have already reported their bitcoin transactions.