On Bitcoin and Taxes

On Bitcoin and Taxes

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The myths enshrouding Bitcoin are borderline hysteria. You can hardly find any news source not reporting on the cryptocurrency. It’s the silver horse of every broke millenial’s dreams. Stories clutter the internet of the crypto-super rich avoiding not only financial worry but taxes. Bitcoin is seemingly the yellow brick road, leading to fortune and a life of cushy government avoidance.  

Maybe that was true back in the wild-west days of crypto’s infancy but the IRS is cracking down since Bitcoin’s massive 2017 success. There is only one way to avoid the mighty fist of the IRS with the currency. You might find that the yellow brick road doesn't lead to the wizard you were promised.

The only way for your Bitcoin not to be taxed is by giving and receiving it as a gift. That’s right, no income tax on gifts. Don’t call your boss just yet to tell her you want all your checks as “gifts” from now on. The IRS doesn’t have a brain made from straw. The gift has to actually be a gift, and the IRS hears this excuse all the time. They’re seasoned at exposing fakers. It also makes no sense if the gift doesn’t occur in a gift-giving setting. You and your boss won’t get away with it.

Besides, if your gift is worth over $15,000 it is subject to the gift tax return at the very least.  And forget about leaving a tax-free fortune to your kids. The most a single parent can leave behind tax-free is $11.2 million.

Contrary to popular belief, Bitcoin isn’t a tax-free, super rich haven. It’s no Emerald CIty and Oz can’t hide behind his curtain forever.

 

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