Press Release
PRESS RELEASE.New tax laws in many countries will come into effect in 2022. These new regulations and laws impact the way people report crypto-related gains.
Crypto investors are discussing new regulations in America. A bill that was passed will significantly increase reporting requirements for traders and brokers.
The increased regulation of crypto investment also raises questions about traders’ ability to include them in their local tax system.
CoinTracking covers the 5 most significant changes in crypto taxes that you should be aware of by 2022.
- Increased reporting requirements for cryptocurrency brokers, including the introduction of 1099-B.
According to the Infrastructure Investment and Jobs Act of 2021(IIJA), which was passed Nov. 15, 2021 and requires crypto exchanges reporting all transactions starting in 2023 on Form 1099, Crypto brokers must now issue tax reports with details about all transactions that were conducted. This includes information on sales proceeds as well the cost basis.
It is difficult for cryptocurrency brokers to adhere to the measures. This could lead both traders and brokers not being able report on it, which can result in unfair penalties.
If you have a 1099-B with wrong information from a crypto exchange, you’ll have to correct it and report the actual trades you conducted and their full information. You’ll have to search for a professional tax accountant with crypto experience to help you solve these issues.
- Section 60501 US tax code provides more information for crypto traders
With Section 60501, crypto traders will have to report more. This section requires people who earn over $10,000 cash or equivalents through digital assets to file an IRS report.
Traders face two major challenges when expanding Section 60501.
- How to find the $10,000 and Fair Market Value of Transacted Crypto.
- Increased privacy and burden by providing additional information, such as the recipient of the transfer, names of parties, social security numbers etc.
- Increased reporting requirements for crypto taxes are caused by DeFi 2.0 revenues and DAOs
Investors now have greater opportunities thanks to DeFi 2.0. This includes rebasing protocol like OlympusDAO or Wonderland. However, earning staking rewards from these protocols increases the difficulty of reporting, since you’re receiving rewards for each rebase with different underlying Fair Market Values (in USD)
The US requires that you recognize any staking earnings as regular income. Fortunately, CoinTracking easily tracks your staking rewards from rebasing protocols to ensure you‘re tax compliant.
- Search for cryptocurrency-tax-friendly places to withdraw profits
Crypto regulation is increasing worldwide. Countries that offer friendly regulatory systems for investors and crypto-related businesses are becoming more sought-after.
You may consider moving to a lower-tax, crypto-friendly jurisdiction if your gains are large and you want to keep trading crypto.
Top crypto-friendly destinations worldwide include El Salvador (Puerto Rico), Dubai (Portugal), Germany, Germany and Singapore.
- The metaverse and tokenization are at the center of this discussion
Experts expect GameFi, Metaverse and tokenization (NFTs), to become mainstream in 2022. Even in the face of a Bitcoin bear market rotation could help to increase that trend from the primary digital asset categories to the emerging ones.
Converting digital assets (e.g. bitcoin orether) to tokens in virtual eco-systems (e.g. NFTs, Metaverse tokens, in game digital assets) is an event that can be taxed in the US.
Trades of bitcoin or ether to purchase NFT in any exchange are examples of crypto-to-crypto transactions. These events can be taxed in the USA as capital gains.
It is difficult to calculate the gains on crypto-tocrypto trades. This makes it more important to use crypto tax software. You can import trades and have your gains calculated using your preferred accounting method. Then, you can submit tax reports.
For these and other challenges, it is important to speak with an experienced tax professional in cryptocurrency. Keep track of every transaction with CoinTracking.
Disclaimer: The information above should only be used for informational purposes and not as legal or tax advice. If you are interested in investing, it is best to do your own research.
This press release is for informational purposes only. Before taking action regarding the company, its affiliates, or their services, readers should conduct thorough research. Bitcoin.com cannot be held responsible for any loss or damage caused, directly or indirectly by, the use or reliance of any content, goods and services mentioned in this press release.
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