Bitcoin and Other Crypto Currencies Tax Trap The IRS is Setting | Cryptocurrencies and How it Affects Your Retirement Planning

Troy Sharpe: Do you own Bitcoin, Ethereum, any type of cryptocurrency? Well, the IRS is setting a trap, and you need to be aware how to avoid this trap so you don’t end up in prison.

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Hi, I’m Troy Sharpe, CEO of Oak Harvest Financial Group, CERTIFIED FINANCIAL PLANNER™ Professional (CFP®), and host of The Retirement Income Show. For years now, you’ve been expected to report your cryptocurrency transactions on your tax return, but many of you probably haven’t been doing this if you’re investing in that cryptocurrency market. Many of you may have no idea what a Bitcoin is or what cryptocurrency is, but you hear about it, you read about it, you see the prices going through the roof. You’re thinking about maybe investing in some.

Well, we’re not going to go into the in-depth profile here of what blockchain technology is and how cryptocurrency plays a role in the future of the world, but what we are going to talk about is what the IRS is doing to trap those people for future criminal prosecution, for the purchases and transactions and sales and not paying taxes on the gains or reporting those gains in their current cryptocurrency accounts.

This is the 2021– well, it’s for tax year 2020, but this is the new tax form that we’re going to file coming up in April. Right here, I have it circled to in big red. This question was on last year’s 1040, but it was buried in the back of the return. There was an excuse possibly if you had transactions and didn’t report them that, “Hey, I didn’t see it.”

Here, you’re not going to miss this. Okay. You’re not going to miss this question. They’ve put it right here underneath your name and address and information. At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency? Yes or no? That’s all they’re asking. This is the trap. If you did acquire an interest in any financial cryptocurrency or make any transactions, buy, sell, send, or receive, and you check no, well, that is what the IRS will call willful intent to defraud.

Right now on Coinbase and a few other platforms that are widely used for buying and selling and trading cryptocurrency, there’s only certain people that have to receive 1099s to report their transaction. Pretty soon in the future, I believe just like any brokerage account, the IRS will receive a 1099 explaining all transactions inside that cryptocurrency account. What they’re essentially doing here is setting the trap. If you check no and you bought, sold, or any of these questions, they’re going to be able to come back in two, three, four, five, six years, and criminally prosecute you for defrauding the IRS.

Defrauding the IRS is serious business. You will go to prison, you will at least do jail time, and you will have massive fines. This is the trap that they’re setting. They don’t have the manpower right now nor the time to really dive into this, but they’ve made it very, very clear that this is a priority for them moving forward, and the IRS will come back, and this will come bite you in the butt if you’re not properly following the tax law.

Make sure if you did this, check yes, make sure to be reporting all of your transactions. If you have gains, pay tax on your gains. It’s just part of the system. You buy, you make money, you pay tax. That’s what the deal is, but if you try to avoid this thinking that Coinbase for some of these other entities won’t report in the future what you’ve been doing today, or even in the past, I believe you’re making a mistake, and it could cost you big time in the future.

As always, with anything when it comes to I finances, be honest, be upfront, report to the IRS, pay your taxes, make good decisions, and things like this can keep your butt out of prison. Hope you enjoyed this video. Make sure to check the yes box if you’ve done anything, and hit the subscribe, hit the like, share this video with someone you know who’s trading cryptocurrency so they don’t end up in prison. I’ll see you guys on the next video.