Crypto tax: What a fun subject. But here’s the good news. According to a recent survey, American cryptocurrency investors are actually trying their hardest to pay their taxes on their crypto gains.
With Tax Day 2022 a little more than a month away in the USA, CoinLedger has released its ‘State of Crypto Tax Reporting’ survey for 2022. It was conducted in partnership with YouGov.
CoinLedger is a tax-reporting platform geared toward users of cryptocurrency, , NFT, and Web3.
The survey was commissioned to try to understand the current issues involving cryptocurrency taxes in the U.S. The survey asked investors whether they currently report and pay taxes on crypto. If they didn’t, why?
Crypto Tax: It’s complicated
While most people who worked out how to pay taxes on their crypto did so, not everyone worked it out. According to the survey, some American crypto investors are still confused when it came to reporting taxes.
Investors sent the clear message that they wanted to pay taxes. But, they ‘didn’t know that crypto was taxable’ (25 percent). 20% said they ‘didn’t know how to report crypto on their tax returns.’
The popular belief that crypto investors are looking to avoid paying taxes is an outdated thought. 50% actually happily paid taxes on their crypto. In comparison, only 15% claimed to intentionally avoid paying taxes. They gave reasons like ‘the government doesn’t know about my cryptocurrency’ or ‘I do not want to pay taxes.’
Dude, 0% of us want to pay taxes.
Other reasons for not paying taxes on crypto included ‘not having the software tools to properly account for their crypto transactions.’ Almost 30 percent reported simply ‘having trouble keeping track of their capital gains and losses.’
Age can be a factor. As reported in previous studies, cryptocurrency is most popular with a younger demographic. These new users are fresh to investing. They are not as savvy regarding tax reporting obligations.
David Kemmerer is the CEO of CoinLedger. “Multiple factors continue to greatly impact investors’ ability to track and report taxes on their digital assets accurately. Confusion is not a valid reason for avoiding paying your taxes. But it has become a reality for digital asset investors. There are new tax laws going into effect. These are coupled with a growing number of U.S. states and international charities looking to, or already accepting, digital asset payments. This makes the need for simple, user-friendly crypto tax and accounting software, specifically for users, more critical.”
Americans aren’t convinced policy makers understanding the industry.
It is nothing new for Americans to lack confidence in their elected officials. And this was seen in the survey. More than two-thirds of crypto investors do not have faith that the politicians and regulators drafting cryptocurrency laws actually understand the industry.
Said Kemmerer, “There continues to be an urgent need for regulators to enact fair and effective crypto tax policy, not only in the U.S. but globally. Our survey revealed the number of crypto investors who are reporting it on their taxes has increased since 2018. Still, the industry has a long way to go from a regulatory perspective. This is especially true when it comes to narrowing the gap between law-abiding crypto investors and those who are avoiding them, due to lack of understanding, overall confusion or otherwise.”
Let’s remind ourselves that if paying tax on crypto gains gets too much, there are countries you can move to that don’t tax crypto at all.
Happy crypto tax day!
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