Few Reporting Gains on Cryptos

Fewer than 100 people out of the 250,000 of tax returns received has included any profits due to a cryptocurrency transaction. Although the tax season is still in its early stages, the percentage of people reporting crypto earnings seems low. A survey conducted by Qualtrics last month found that about 57% of 2000 people surveyed said they have realized some gains from cryptocurrency transactions.

You recall that Coinbase was order to surrender the records of all their clients to the IRS. The IRS considers cryptocurrencies gains to be taxable. After this coming tax year, it is likely that if a majority of filers fail to list any gains from cryptocurrency transactions, the IRS will act by actions similar to what they forced on Coinbase.

It is reasonable to believe that filers whom have gains from cryptocurrency transactions have not yet submitted their returns. Historically those filers whom had gains and are owing tax normally wait until the deadline before filing. The IRS expects that 156 million returns to be filed this year.

While it is still too soon to draw any conclusions, it appears that many are going to take their chances and not file their gains. The main draw of dealing in cryptocurrencies was that they were anonymous and their identity was secure, I believe that many people will rely on this belief and feel if they don’t report it they won’t be tracked down. I don’t know the outcome but if these naive people believe in their anonymity, they are probably oblivious to what a block chain is.

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