A recent survey released earlier this month has revealed that 35% of US cryptocurrency investors believe they don’t have to report gains or losses to the Internal Revenue Service (IRS).
The survey was conducted by Credit Karma and took place during November 2018. The company surveyed 1,009 US Bitcoin investors who were over the age of 18. The central topic of the survey was to learn about the participants’ Bitcoin investments and their plans to report (or not report) their realised gains or losses to the IRS ahead of the upcoming tax season.
One of the key findings from the survey was how US investors who had sold their Bitcoin collectively lost roughly $1.7 million. The average loss per person totals $718. It also revealed that the unrealised losses for those investors who still haven’t sold their Bitcoin clocks in at approximately $5.7 billion.
Interestingly, only 53% of the participants plan to report their Bitcoin gains or losses. 19% hadn’t made up their mind at the time of the survey, while 35% of those who sold at a loss don’t plan to report it at all.
However, investors who sold at a profit are more likely to report their gains compared to investors who sold at a loss.
Remarkably, 58% of the participants were not even aware they could claim a tax deduction on their realised Bitcoin losses. Out of the investors who don’t plan on reporting, 35% believe they aren’t required to report their gains or losses.
Nearly 60% of those who do not plan on reporting do not believe their gains or losses were significant enough to report.
The survey details how at an average loss of $718 per person, investors who do not plan on reporting could be making a grave mistake. This is because investors can claim capital losses as a tax deduction. The survey reveals, “These losses could offset whatever gains investors experienced during the year (up to $3,000), potentially giving them a significant tax break.”
The Credit Karma survey highlights the urgency for more education in the crypto space. This isn’t a new theme either. Coin Rivet has reported on the lack of crypto and blockchain education opportunities in the past.
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Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.