Coinbase taxes + USA

Has anyone payed taxes on coinbase money from staking before? Basically I would buy bitcoin with my credit card then use that to buy osrs gold and then whenver

I won big I would sell the gold immediately for bitcoin to coinbase then cash it out to my bank.

The thing is I have lost just as much money as I have won but I don't know if it would cancel out on my taxes. I have cashed out 8000 dollars worth to my bank but I am pretty sure I have bought just as much using my card. How would I approach taxes?

Do I have to even worry about it?

 

I don't really understand it either. As far as I know, you still have to report it.

 

You should report the income, but speak to a tax professional if you want a real answer.

I would imagine it works like gambling losses, which are deductible up to the amount of your winnings if you itemize your deductions.

 

Here's an example of where that would be different I think
- If you buy BTC at say, 10.2k/coin, and buy gp at 10.4k/coin, you've already made a net gain, even if you lose all that money staking.

 

Do your taxes. If you need help let me know I just did mine.

 

im just worried because I am going to college right now as an independent student with no income on FAFSA so I get a lot of financial aid from the state. Would this affect that as well? I heard coinbase dosent report to IRS anyways unless it is above say like 20k? If i get caught wouldn't I just be able to plead ignorance?

 

I heard online gambling is illegal as well in California. God I really don't know what to do

 

I'm thinking you probably don't need to mention it was gambling? You could probably act as if it's buying/selling goods?

Gambling | FTB.ca.gov

 

So i guess just talk to a tax professional and tell him that I purchased bitcoin and used it to sell and trade goods? does he calculate the taxes for me? I really don't want to get someone involved if I dont have to. anyone know the penalty if I do get caught?

 

Posting this thread is essentially you stating an interest in committing tax fraud. The penalty is paying what you owe + an extra fee of some percentage of that amount + having this on your record for the rest of your life.

It's not worth having tax issues when you're only like 20 years old. Get in touch with a tax office, explain the situation, spend the couple hundred bucks or whatever it costs, and get it taken care of. If you're a student and presumably in a low tax bracket, it might be easiest to just report your "income" from this activity and ignore the fact that you lost some of it gambling.

 

@jkim203
If this is your first time paying taxes, use TurboTax or one of its competitors. Fill everything out, and you can see how your final tax total changes depending on how you enter this $8,000. The lowest tax bracket is 10%, and I'm pretty sure the standard deduction is north of $12,000, so you probably don't owe anything even if you do report only your income and none of your losses to counterbalance it.

 

Definitely report it. The IRS is asking people to self report in 2019 and forward and will be more lenient as long as you try to report it. Buying/selling goods would result in you needing to file a Schedule C as you'd be claiming this income as business income in the self-employed category. This would result in a different tax treatment and a higher tax fee from a professional tax preparer; however, I would still recommend visiting one in this case.

 

Do you have an amount in the US which isn't taxed?

In the UK we can earn up to £15,600 without paying any tax. It's called our personal allowance.

So if in the year you earn over that amount, you'd need to declare this income for sure. If not then you're probably grand.

 

this would be different due to it being classified as business income, which has a lower threshold than the ~12K standard deduction

 

Is he doing this through a business?

In the UK I can call the HMRC (gov. Tax body) and ask them if I need to do this or not and they will accurate advice.

 

He would either have to file it as capital gains (buy/sell for higher) or business income (buy/sell goods using bitcoin as currency to facilitate trades). Business income is most appropriate in this instance.

 

@Dunworry is correct. Not doing your taxes is not worth it. Filing the income correctly is also important. There’s not really a way around it.. Deal with it now or get fined later.