Receive all Bitcoinist news in Telegram! Using Bitcoin to buy using bitcoin everyday things, such as a burger, could trigger a tax bill from the IRS due to cryptocurrency being considered property. However, there is potential relief on the way in the form of new legislation.
The last few years have seen a meteoric rise in cryptocurrency, which has been quite exciting for a lot of people. National governments have been less excited about Bitcoin and its brethren as they grope to find ways to legislate and regulate this new, decentralized virtual economy. It is true that cryptocurrency is being more accepted, as seen by the increasing number of retailers willing to take Bitcoin for purchases, but there are major wrinkles that could crop up. The use of Bitcoin in a routine transaction, such as grabbing lunch, buying a couch online, booking a hotel room, or paying for a massage or other service constitutes a taxable transaction that must be tracked and reported to the IRS at the end of the year on your tax return.
It is easy to see how an enthusiastic user of bitcoin could have a hundred or more taxable transactions to report at the end of the year. Individuals all over the world are starting to use cryptocurrencies for small every day transactions, yet here in the States we have fallen behind and make cryptocurrency use more of a challenge than it needs to be. With this simple legislative change, anyone can make digital payments to buy a newspaper or a bike without worrying about tax code challenges. Will the Cryptocurrency Tax Fairness Act of 2017 pass?
It’s probably a long shot, especially as how the US government is loath to give up any sort of revenue stream. As we know, the IRS is already working hard to track down people cheating on their taxes by not reporting Bitcoin and other cryptocurrencies. It’ll be interesting to see how this all shakes out. Maybe we’ll be lucky enough one day to be able to buy a hamburger or video game with Bitcoin without having to fill out a tax form. What is your opinion on the IRS viewing cryptocurrency as property?