According to personal finance firm Credit Karma Tax, filers who reported short-term capital losses for cryptocurrencies in the first month of 2019 jumped fivefold year-over-year. After the incredibly bearish crypto markets of 2018, data from early tax filers highlights the fact that more investors are claiming losses this tax season. However, a survey the company recorded back in November found that the number of people deciding not to file crypto taxes has increased.
Tax Filers Reporting Short-Term Crypto Gains and Losses Spike Considerably
Last April, as tax season approached, news.Bitcoin.com reported on how many cryptocurrency holders didn’t really care. At the time, the general manager of Credit Karma Tax, Jagjit Chawla, explained that out of 250,000 cryptocurrency holders, less than 100 people (0.0004%) reported their gains to the IRS. The tax season in 2019, however, has seen an increase of individuals reporting short-term capital losses. Sharing the data with our newsdesk, the company said that filers who reported short-term capital losses for bitcoin in the first month of 2019 jumped 521 percent in comparison to the first month of 2018. Moreover, short-term BTC losses averaged $3,405, which is a 322 percent increase since last year’s tax season.
“Short-term bitcoin gains declined during the first month of the 2019 filing season, with a net 7% decrease in the average amount of gains,” the report reads. “However, 33% more early filers reported short-term gains year-over-year.” The document’s author notes:
Investors with long-term gains are the winners so far this tax season, with early filers reporting an average gain of $15,352 during the first month of the 2019 filing season — up 103% from the same period last year.
Despite Increase in Short-Term Filings, Survey Reveals 47% of U.S. Investors Still Plan to Skip Paying Crypto Taxes
The methodology Credit Karma Tax used stems from data from members who filed their 2018 federal income taxes with the company between January 28 and February 22, 2019. This is in comparison to tax filers who submitted their 2017 taxes with the firm between January 29 and February 22, 2018. So year after year, data shows that people are claiming gains and losses more so than 2018 and 2017. However, the amount of people paying taxes on crypto assets is still incredibly small compared to the number of investors. In November of 2017, a Lendedu survey of 1,000 U.S. residents showed that 35.87 percent of the survey participants responded, “No, I do not plan on reporting gains or losses on my tax return.”
The data from Credit Karma Tax published on April 3 reveals that these numbers could be climbing higher. In November 2018, the company surveyed 1,000 bitcoin investors aged 18 and older and discovered 47 percent of U.S. based investors did not plan on reporting crypto gains or losses. “More than a third of those surveyed were unaware they could be required to report the same on their tax returns,” the firm’s report reveals. Last year a few bitcoin proponents got extremely salty with the previous year’s survey which showed lots of crypto holders were not paying taxes, so the increase last year may infuriate them.
In fact, for many people in the bitcoin world, the idea of crypto and taxes is like mixing oil with water. Only recently, bitcoiners have been discussing how crypto taxation is actually the biggest hindrance to digital currency adoption. So the steady increase of bitcoin holders that do not plan to report losses and gains to the IRS suggests that people may be thinking twice about paying into a blatantly corrupt and immoral system.
What do you think about the increase of short-term capital losses filed year-over-year? What do you think about the November 2018 survey showing 47% of investors do not plan to file crypto gains and losses? Let us know what you think about this story in the comments section below.
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Jamie Redman is a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open source code, and decentralized applications. Redman has written thousands of articles for news.Bitcoin.com about the disruptive protocols emerging today.