Binance and the IRS

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Guys I almost wanna let you in on a little secret because I want burguer gubermint to go fuck itself, but I'm afraid if I do they'll eventually smarten up and crackdown on it. I'll just say that as long as you're only trading alts and not moving fiat, you can very very easily verify your account on big exchanges in way that's completely undetectable by us gov

Germanfag here, does binance also lick the Finanzamt's boots?

This has been asked a bazillion times.
Let's say you buy 0.2 bitcoin when you start trading crypto. You send everything to binance and get rich daytrading.
Then you cash out 50 bitcoins.
But you had only 0.2 initially, the IRS will ask where those extra bitcoins came from. If you can't prove you obtained it all legally, they will take it all away. If you prove it's all yours you pay taxes and they leave you alone.
Don't want to pay taxes? Move to Belarus. Or don't ever cash out.

yeah but I don't really plan on cashing out a huge lump sum of money. I'm a total minimalist and I'll probably even maintain some form of employment just for fun. I would just use a bitcoin ATM to cash out anonymously. My local one has a 3k daily seller's limit.
But if Binance tells the IRS how many bitcoins I had, then I'm fucked. You get it?

They won't take it, you will have to satisfy their information requirements....i.e. come up with the data. Until then, your assets, bank accounts, pay could be frozen. The IRS is awful to work with......even if they make a mistake, the response will always be "prove to us why we are wrong", It isn't innocent until proven guilty.

Your initial purchase of 0.2 BTC was the cost basis of that first trade. When you moved your 0.2 BTC into another crypto, that was a taxable event.

The IRS scans returns for certain things. If lots of people are reporting crypto trading incorrectly, listing buzzwords like "bitcoin" "BTC" "ETH" etc on your schedule D will bring up red flags. Remember, they can audit returns up to 6 years prior. Imagine getting an audit for your 2017 return.......in 2021.

Why are mods closing tax threads? Some of them say archived after a few posts?

Binance don't even ask for your documents, that will never happen.

guys clean all your crypto with monero

are you good with this stuff? I don't need someone to file my taxes but I need advice specific to my situation as a NEET. There are some intelligible people on reddit but they shutter at the thought of tax evasion. It's not something I want to do but I'm leaving it on the table. I'll pay you for some guidance

he's going to pajeet you.

False, Bittrex does not send anything to the IRS. Only coinbase. This may change n the future, but we'll all know when it happens.

If deposits to your bank account are low, it won't raise any red flags. If your lifestyle does not exceed your income you probably won't get caught with anything. What does it look like on your checking statement when money comes in from crypto holdings? What if the IRS says to Bank of America, "turn over all account records that have exchange transfers"

Suppose BTC goes to $100,000 like Mcafee says. Then what are you going to do? Now you have a large sum of money, all of it dirty and subject to back taxes/penalties or felony evasion. Do you really want to enter this world?

>What is the likelihood that the IRS asks Binance to turn over customer data? And what is the likelihood of Binance doing so? Will they lick the IRS' boot?
IRS has no authority in Japan. If binance share your details, that would be a breach of data protection. IRS could go through Japanese authorities tho, so there is a risk. They won't chase you individually unless you're a high profile tax dodger, but could do operation and request all US citizens data.
If tax due is no trivial, than just fucking pay it. They can hunt you down even few years from now

If you're playing with big money, i.e. more than 500k, consult a tax lawyer. The bigger of a fish you are, the more the IRS will try to fry you. If you play it smart and have a professional handle your affairs, you will both walk away with more and avoid the penalties from having defaulted.

Thanks FBI...

Also, and this is just me personally, but I am not cashing out until I made AT LEAST this amount. I won't mind having to do all this. It'll be worth it. And yes, I know the new laws that have been passed are ridiculous. But the chances that the IRS will hound you for every single trade you made on a exchange like Binance are relatively low... if you're that concerned, keep your trading volume to a minimum and keep a record of what you do trade. Don't stress over this until you have more professional insight to work with.

I stupidly made one 11k withdrawal from coinbase back in June. So I may already be flagged.

I don't mind paying taxes if the amount comes out to be fair. But I am financially illiterate and I've heard several people on this board say that I will end up with nothing by the time taxes are paid, because of how many thousands of trades I have made (most at a loss).

>"Hey guys, CryptoTom here. I just wanted to share with you what I think the biggest mistakes in crypto trading are. 1. None of it is taxable until you cash out blah blah blah......let me give you my uninformed interpretation of tax law"

The information you saw on youtube or reddit about section 1031 is just someone's misinterpretation of what those rules were for. Regardless of whether or not people have been erroneously using these rules to say they were exchanging like property, as stated above, the IRS extended the statute of limitations for audits to 6 years.

1031 never applied to stocks and the IRS has basically said that crypto trading is like stock trading. Having a steady wagecuck income of $50,000 per year and then all of a sudden reporting $500,000 in capital gains could cause problems for you.

I made 6k from my wagecuck job last year and now I have 500k in crypto...

Dude you are fucked.
If you do not pay taxes on those bittrex gains you will owe that money to the irs. That means you will owe the profits you made with this debt too.
You could be paying more in taxes than you have right now.
It's all or nothing now for you, you have to launder it somehow

So you now understand that it would be strange for you to write $0 for your W2 and all investment income at the age of 20 or however old you are. It's one thing if you are 45 years old and have a historical record of investment income.

To the IRS, you earned $506,000 if that was all within the year. If you legitimately filed your return for 2017, you would owe more than 100k, probably closer to 150k. You don't have the cash on hand to pay that by mi April. Where are you going to get it?

The IRS isn't going to subpoena records from a chink exchange lolol.

I would gladly pay 100-150k to be able to sleep at night. But is that all I will really owe? Despite making all these trades?

where did debt come into this? I don't have any debt

So I uploaded my thousands of trades from Kraken to bitcoin.tax, and it can't even calculate my EOY balances correctly. Maybe has to do with margin trading?

Has anyone who's done lots of margin trading had any success using cointracking.info to figure their tax? Don't want to drop $170 on an account if their service is just as shitty.

It depends if they are short term or long term. If you have 500k in short term gains, then your income was 500k plus the 6k on your W2. If you made hundreds of transactions, you have to show all of that. Losses can offset gains.

Find a simple tax calculator online and enter the information....H&R block, taxact, intuit, whatever comes up on google. The highest income tax bracket is 39.6%. It would depend on whether or not all of your transactions happened within the year.

If you are a NEET and own nothing and have nothing more than a standard deduction, you are going to get reemed.

Why did you think you would lose everything? If you don't live in the USA, none of this applies and who knows what you will owe.

the 500k was an exaggeration. I'm at 350k now. But it was less than 100k on December 31st. Yes I 4x'd in less than two weeks.

Would you be willing to answer some more general questions via email or another medium? I will legitimately pay you several hundred dollars.

any amount over 10k raises a flag (not red necessarily) but the bank has to notify the feds. so you are on the books for that and will have to pay tax on that 11k.

I transferred 3k from my bank to coinbase in March. Withdrew 11k, 5k, and 3k, sums from coinbase last summer. I only had 20k or so remaining in crypto, which I sent to binance. That 20k has since grown to 350k.

Req is litterally being developed by a bunch of nonames freshly graduated from a litterally who school and marketed by people with online degrees in business but yeah keep thinking they did anything other than scam you off a pnd

the fed know about the sums you withdrew from coinbase as coinbase reports. binance doesnt report so do what you want with that info.

imo, pay tax on coinbase withdraws and slowly send btc and eth to coinbase to slowly cash out what you want.

or play the long game, wait for some fiat-crypto dex to come up and/or crypto laws in countries to catch up and change. the internet didnt have favorable laws at first and now we have amazon.

I wouldn't even move anything through coinbase again. I have BTC atms near by which allow for 3k withdrawals per day. That is plenty for me. Plus you have paxful and these new services.

So at this point in time, I have officially "cashed out" 20k. I'll of course pay taxes on that. But my big stash is on binance. They don't report, but assume they did. Would I have to pay taxes on any of that if I have yet to cash out?

I would just prepare for it and hope that it doesn't happen.

If I just hold, do I have to pay taxes on it yet or not?

if the irs ever finds out about it on binance yes each trade is a taxable event. the irs will tax you on any income or profit you made each year regardless of where that money was, provided they know about it.

Any thoughts on using Gemini to cash out?

Their rates are pretty much the same as Gdax's and they haven't been to bed with the IRS yet.

they will if eventually give into to irs. the winklevoss twins are public figures and are trying to get a bitcoin etf going. the irs will get them eventually.

as far as I'm aware if you cashed out a coin you held for less than a year you pay your income tax rate on the gains from when you bought it to when you cashed out.

I'm a poorfag who lives with mommy and daddy and I make $12k/yr so I'd pay 12% if I cashed out my $90 worth of ETH

Can I ask you more retarded questions thru email? I'll pay. [email protected]

What's this about NEETs? I currently dont have an income and just trade shitcoins does this heavily affect taxes? Obviously all short term trades

>Why are mods closing tax threads? Some of them say archived after a few posts?

Probably because its all bullshit and the IRS will not be able to enforce taxes on coin to coin trades and the only time you worry about it is when you report your taxes when you cash out.

ask here. your question is prob relevant to others here.

I'm getting confused as fuck. That user said NEETs are going to get reemed. In another thread some other knowledgeable user said that NEETs have it the easiest because our low levels of income put us in a better position for taxes on capital gains.

Without going through each individual trade and making the calculations, how fucked am I for having made thousands of trades? Someone said I will be left with nothing but pennies. That's the only reason I am considering hiding this money.

Theoretically speaking, if someone just bought gold/silver directly from Binance or another site, wouldn't that be a relatively safe method for amounts under 100k?

i kinda agree with you. the irs hasnt arrested anyone yet for crypto tax evasion and prob cant begin to enforce it. there are 7 million regular usd tax evaders the irs hasnt done anything about either. they may arrest a few big whales to prove a point but crypto is beyond what they can do atm.

they cant stop etherdelta, monero, "lost" keys, "wrong" wallet addresses and future dex.

income under a certain level isnt taxed. you still report it but the form will say you dont owe any. neets dont make enough to pay taxes in america so the few thousand they make in income in crypto isnt taxable. they still have to report it tho which is what i thot we wanted to avoid.

nah, the irs will only take from trades that were profitable and net total plays a roll. if you made 100k in jan then lost 100k in feb you dont pay taxes. still gotta report it tho. so each trade you made with profit, rule of thumb would be irs gets short term capital gains 35% on it. you can add that all up and thats your tax payment.

Ok. A few more brainlet questions...

December 31st my stack was worth around 110k. Today it's worth more than 3x that. Do I have to worry about anything past the 110k as far as paying taxes this year, assuming I was to do everything legitimately?

Depends how you did on each trade. Capital losses are involved too.

Listen, the IRS loses money left and right. Only 1% of all businesses get audited. You think they are going to subpoena some Chinese exchange to get a bunch of NEETS tax records, and then pay 10,000 employees $150k a year just to waste time tracking your VRG to OMG microtransactions? Not happening.

If you have over $500k-$1mm you should definitely be careful, but as long as your money is on the exchange or wallet you're fine. It's when you try to start cashing it out in big amounts that is the problem. I am theoretically planning on opening a shell corporation in the Caribbean when I hopefully get enough moneys.

the amount owed is based on the calendar year. so whatever you had on decemeber 31st at 11:59pm is all they care about for 2017. so thats all they will tax for 2017. however, if they demand you pay tax on that and say pay 35% about 40k. if you dont have that on hand you will have to sell some of your stack to pay it, which in turn generates another taxable event for 2018. so if you do that, sell enough for estiamted 2017 tax payment and 2018 payment.

>i kinda agree with you. the irs hasnt arrested anyone yet for crypto tax evasion and prob cant begin to enforce it. there are 7 million regular usd tax evaders the irs hasnt done anything about either. they may arrest a few big whales to prove a point but crypto is beyond what they can do atm.
>they cant stop etherdelta, monero, "lost" keys, "wrong" wallet addresses and future dex.

Yeah, the entire topic is stupid. Pay your taxes when it becomes fiat and 99% of you anons will be fine. The IRS will be happy with that too because its such a massive hassle to track coin to coin trades. Unless they really fucking want to take you down you will be fine. But if they wanted to take you down you would be fucked anyway, crypto or no crypto.

clarify actually, that 110k you cashed out, if you still have it sitting in bank sit tight with it, take the 40k for taxes adn the other 60k is yours. if you dont have it you will need to get the moeny to pay tax on that. thats why many capital investors on wall street actually pay quarterly taxes instead of yearly, so that they can take that 60k stack and get back in and not sit on it for a year to be sure you did your taxes right.

>if you dont have that on hand you will have to sell some of your stack to pay it, which in turn generates another taxable event for 2018. so if you do that, sell enough for estiamted 2017 tax payment and 2018 payment.

Technically double dipping is something the IRS is not allowed to do. I am pretty sure a lawsuit against the IRS is possible and whales would gladly donate for the first person who ends up in conflict with the IRS like this.

Would paying quarterly being optimal for crypto in general? One thing to consider is that crypto is always going up in value so if you delay as much as possible between paying you will tend to do better long term.

But if quarterly is really that much less of a hassle maybe its worth it.

oh that may be. ive not done it yet anyway but we will see some lawsuits in future that will decide how crypto will proceed for the future.

right. The odds of them doing that are virtually infinitesimal, but if they do, or devise a more efficient system, then I am absolutely fucked.

So let's say I cash out that 110k right now. The IRS never expected to see that money because it was on binance. My other 200k is still on binance, unknown to them.
Do I just pay 40k for the year and go on my way?

I am super interested to see how this will turn out myself. Once we know the rules on how the taxes work then we can start making coins with functionality to fully avoid taxes altogether.

That will be when the IRS goes into full panic mode.

Which was shot down by the SEC.....it will never happen with as volatile as the market is.

I hope it works for you. It will for many. Others will get caught or run into problems. If you didn't already understand, the IRS is against you. Most agents think of your earnings as their money.

If the only thing you have done is purchased various crypto with USD and have not made any other transactions, you have not created any taxable event.

That is completely wrong. If your capital gain/loss is $350,000 which you claimed from from December 31 onwards, then only the transactions on 12/31 were relevant for what is coming due on 4/17/2018. You have another year to figure out your 2018 transactions.

Someone who works, owns a home, has a mortgage, children, pays large amounts of sales taxes, charitable contributions, medical bills out of pocket, etc....they have significant opportunities to reduce their taxable income. NEETs don't. You have no money, you have no home, you have no property tax bill, no mortgage interest deduction, no child-related tax credits, no pre-tax medical premiums, no deductible contributions to a 401k or IRA. You have a standard deduction of about $6000 or whatever it is this year. If you live with your parents and they claim you as a dependent, you don't even get a personal exemption. Whoever said that in the other thread has not idea what they are talking about. Yes, if you make no money through a job and have a relatively small amount of capital gains, your standard deduction might offset your ST gains. If you are in the lower brackets you wouldn't pay any long-term gains either. But you aren't talking about small money. $350,000 in gains (or income in your case, for next year at least) is the equivalent income of an executive level Boeing engineer with a phD. But he owns things and saves money to a 401k and has ways to reduce his taxable income. You don't.

Here's a common strategy for cashing out

>go on localbitcoin and pray to jesus you aren't dealing with FBI/IRS sting agents

i know some of the binance chinks and theyll never bow down to the irs niggers

>something the IRS is not allowed to do
The IRS shouldn't be allowed by the people to exist, but it does. Federal income tax is actually illegal. The federal government used to be able to support itself off of just tariffs and other small things that did not cripple individuals. This is, of course, before the federal government became so bloated with bureaucracy for the sake of destroying the white race (via welfare\nanny state\institutional feminism).

if you cash 110k from binance today by moving to coinbase the irs wont know about binance unless they do a serious audit and trace wallet addresses. that 110k will be taxable, and may be suspicious as to how you suddenly got that but wont necessarily trigger an audit. I think if you pay that tax on 110k you are good to go.

many of the irs questions can be boiled down to: uncle sam doesnt care how you made your money, as long as you give him his share.

pay your 35% on it and i dont believe the irs will care.

another thing to know. the irs wont immediately audit people or arrest people. they assume people incorrectly filed and will simply send you a bill. that will be the indicator as to what to correct if they send the correct tax bill to you. so maybe wait to see how 2017 crypto taxes pan out before cashing out too much more.

correct.

man I can talk astrophysics and topology but finance kills me... I'm confused again. Why would it be suspicious if I am making it known that I earned that 110k through crypto trading?

>I hope it works for you. It will for many.

I am 100% fine with paying taxes. But the IRS is asking way too much this time with no defined rules standards procedures or understanding of the technology. Everything is so up in the air right now its dumb to not take the simple approach first.

a large spike in income and followed by a large spike in expense is a red flag for audit. if a grocery store clerk suddenly declares 100k income and buys a ferrari the irs will ask, where did you get that money?

however, if you show you bought one coin or several coins at a certain price and sold it at a certain price its not an issue then. the irs sees you made an investment which is what you intend to do so you should be fine.
this is how i am too. i will pay taxes but they need to clarify it, it makes no sense right now and isnt really feasible in many cases.

>the irs sees you made an investment which is what you intend to do so you should be fine.

And if you pay taxes on the amount you cashed out to buy the car then its logical to assume you will be fine.

No big purchases for me. Hence why I want to keep most of it in crypto for the time being.
But won't this close the loop in a way? Let's just assume they did track my coin movement or something. I moved 20k worth of BTC/ETH off of GDAX back in september. (Initial investment was 3k). That 20k was never accounted for because it just went off to some chink exchange. Now I am coming back with 110k, basically saying this is where that money went and this is what I made.

They wouldn't do that. The point is that a mysterious large sum of money comes into your bank account from Coinbase. They wonder how that happend an freeze your assets until you can prove where it came from.

I would recommend to anyone who has done heavy trading in 2017, to file an extension. This gives you an additional 6 months to figure things out and read what other people are doing. You might even see an IRS publication that explains crypto after they start to see thousands of erroneous returns.

Trades at a loss are considered as, shockingly, loses. To the best of my knowledge, you are not paying taxes in loses, only profit. And yi subtract loses from profit to find taxable amounts. And as most trades will be short term, you will be taxed at income bracket levels. Unless you held something for a year or more.

nope nope nope. 10k deposit into the account doesnt matter unless its cash.

how can that be?

banks love to file SARs for literally everything

accurate. The 16nth amendment needs to be abolished

>because of how many thousands of trades I have made (most at a loss).
This is why you NEED to calculate your net gains. Those losses are subtracted from your gains for determining net gains along with fees and the buy-in itself. It doesn't matter how many trades you make. It is very possible to compile 10000 trades including icos and everything else in one day on bitcoin.tax or cointracker.

yea and you are fine then. the irs will see that you moved it to another exchange and made money and you showed them that. so shouldnt be a problem.
this is a good idea.
selling btc for cash would be a cash deposit?

one final thought for people with bigger stacks. look into tax loss harvesting in case you ever make a big loss in a year.

Probably a stupid question, but why can't you just cash out in small increments to avoid drawing any attention?

$10,000 in hard currency. And possibly less if someone thinks that they are clever showing up with $9500 every month.

If someone earns $12,000 per month the IRS doesn't get a notification.

What are you talking about they don’t have rules or standards for it? If you held it for less than a year, you pay short term capital gains tax on it. So you go by your income bracket. If you held it longer, you pay long term capital gains tax. Which is something I’ve never fucked with learning about since I’ve not held long enough to matter.

You pay only on gains to the best of my knowledge, not loses. But they balance against eahother and you owe on the gains if any.

the irs can see everything on your social security number. they can still see small amounts of money that add up over time have been added into your bank account.

And what do you think you will do with $3k cash a day? Hide it in a safe in your home? In order to spend the money on big ticket item like a house it needs to be legit. You are young right now so not thinking forward. Keep making money in crypto and get a good cpa or tax lawyer. You will be much happier you did than just cashing it out with atms and living like a dope dealer.

You can, that's tax evasion if you want to take the risk though. If it's going through coinbase it will most likely get reported too.

Also your coins will moon a lot more 5 months later and the taxes will be easier to pay HAHA

An extension is an absolute must for those paying crypto taxes!! Even if you dont think you need one you should do it! Is it possible to file an extension for longer than 6 months? 8 months would be even better.

You're not thinking ahead enough. :^)

>wait 10 years, buy everything including your new house with crypto :^)

OK. I think I almost have a clear understanding then. Just to reiterate:

I can withdraw my 110k to the bank anytime. I will have to pay capital gains taxes on the lump sum, as well as taxes on the individual trades. However much will be left of that, I don't know.

The remaining 240k I can leave in crypto and do not have to worry about at all until next year.

Is that right?

lol no. "unreasonable search and seizure" is in the fucking constitution. they're only required to report deposits over a certain amount, to help fight money laundering.

not to mention, the IRS has basically no enforcement budget. if you just don't pay shit and don't say anything about it, then there's about a 95% chance you'll never hear a damn thing about it.

if you are moving sums of over 10k through binance you technically have foreign assets and should file an fbar. if you don't and don't report and the irs somehow finds out not only will you owe taxes you will also be fined 100k per violation. shit is no joke.

>I can withdraw my 110k to the bank anytime. I will have to pay capital gains taxes on the lump sum, as well as taxes on the individual trades
the capital gains tax and tax on each trade is the same thing. but you got it.

now just figure out income tax, and state tax and property tax ;).

>lol no. "unreasonable search and seizure" is in the fucking constitution
>constituion
>after patriot act
go ahead and read the constitution to the irs office and see how far you go. I agree its wrong but we are currently powerless.

>we see here you sold bitcoin - where'd it come from?
I mined it.

Look up 'structured deposit arrests' and rethink that.

> everyone in here has made hundreds of thousands

Everytime I read through these threads I feel dumb as rocks because I'm barely up 300% since November, if you remove buying

>I mined it.
mining bitcoin is an income taxable event. so you mined it but didnt report it...tsk tsk.

You would owe taxes on the total gains minus losses of your trading that led to you having 100k. But if you then withdraw more later, and didn’t put more in, they will say where the fuck did this come from since you accounted for all trades when you cashed out the 100k. Unless you also make sure to account for at least some left behind.