It’s tax season and you probably owe the government some money if you’ve been dabbling in crypto for a while. From staking rewards to small tax-free transactions to getting your refund in Bitcoin, we’ve got all the biggest stories with everything that’s happening in the thrilling world of paying your taxes.
Crypto Taxes & the IRS
If you want to get clear guidance out of the IRS you might have to take the agency to court. At least that’s what one couple has done regarding their profits from staking Tezos. Here’s the full story.
In 2019 Joshua and Jessica Jarret paid several thousand dollars in taxes for their staking rewards, even though they never sold the Tezos that they’d earned from staking. Two years later, the couple concluded that they shouldn’t have paid taxes on their unrealized gains, and they requested a $3,293 tax return from the IRS.
The couple’s primary argument, which sounds logical enough to us, is that stakers shouldn’t have to pay taxes on their earnings until they sell the coins. Surprisingly, the IRS actually seems to agree! After six months in court the IRS has given up and offered to pay the couple the refund that they’ve been asking for. By offering them their money back, the IRS tacitly admitted that the Jarrets shouldn’t have to pay taxes on coins that they never sold.
It’s a big victory, and the Jarrets could have taken the cash and called it quits. That’s not what they’re doing though. Instead, the couple is going to continue with the case. As it stands now, the IRS has admitted that the Jarrets overpaid, but that doesn’t actually translate to a change in policy.
By keeping the pressure on the Jarrets are hoping to force the IRS to permanently update the tax code so that stakers don’t have to pay taxes until they sell their coins. For everyone’s sake let’s hope that the Jarret’s court case is successful!
Also in the tax news, in a rare display of bipartisan support a group of representatives have reintroduced a bill that would exempt all crypto transactions of $200 or less from getting taxed. As it stands now, even a $1 dollar crypto transaction is subject to taxes. This is a huge inconvenience to anyone who wants to spend their coins, as well as businesses that accept crypto payments.
The bill has failed to pass in earlier sessions, however, we’re hopeful that this time the lawmakers will be able to get it through. Paying tax on a $200 transaction, let alone a $2 transaction, doesn’t make any sense and these annoying tax laws are slowing down the growth of the American crypto industry.
And finally, TurboTax has partnered with Coinbase to let American taxpayers get their refund in crypto! Anyone who pays their taxes with TurboTax can request that their refund goes straight to their Coinbase account, where the money can be used to buy any of the dozens of cryptocurrencies that are available on Coinbase’s exchange.
This new development should make it easier than ever to buy into crypto, and hopefully there are lots of Americans out there who are ready to take advantage of this cool opportunity.
This content is for informational purposes only and is not investment advice. You should consult a qualified licensed advisor before engaging in any transaction.