WHAT IS BITCOIN? - TAXATION ON CRYPTOCURRENCY

Now We Are In 2020 and the whole world is using technology. 

Top countries of the whole world using digital platforms in every portion or every part in business in any criteria.

I can say that there is no one remaining in the world who is not available on digital platforms like Facebook, Instagram, Twitter, YouTube and many more.

Like this now currency is also in a digital or virtual form available.

One of those virtual currencies is BITCOIN.

So,

 WHAT IS BITCOIN?

Bitcoin is a virtual currency which is mined from high- tech powered computers means Bitcoin is not printed by central banks it is just mined and this process is called MINING.

Now make your understanding more about Bitcoin means where we have to store it.

As we know BITCOIN is a virtual currency that's why we need an cryptographic encryption system to make them secure for their transfers and to storage.

BITCOIN mining needs high tech computers with a great power to mine and it takes some days to mine a single Bitcoin.

We can use them as cash for purchasing any item that you want from stores where it is acceptable by shopkeepers.

Now come to main point that is,

taxation on cryptocurrency

TAXATION OF CRYPTOCURRENCY

As we know bitcoins are accepted around the world as a cash as a national currency in the whole world.

In its starting time when it comes to world then there is no any taxes on it because IRS (INTERNAL REVENUE SERVICES ) they give this

Statement that bitcoin is not issued by government or central banks then bitcoins should be treated as assets or an intangible property and from this statement bitcoins are implicated as a tax free.

But in 2019, the Federal agency said that he is sending approx 10000 warning letters to taxpayers who are not showing their real income and now they must have to pay the tax for their virtual currency transactions too.

This happens because the government knows if they consider bitcoins as an asset then it can be used in criminal activities as a Terror funding to many organizations due to this concern bitcoins transferred from asset to currency under government criteria.

So bitcoins were treated as an asset and you are using it for simple transactions to purchase at market but you have to show its report to the government that how much you hold bitcoins (it may be for short term or long term no problem).

From these assumptions govt.decided for tax leads at following different transactions

• Selling bitcoins by mining to a third party
• Selling bitcoins from buying someone to a third person
• Using bitcoins to purchase some items like goods or services
• Using bitcoins,that you bought from to buy some goods or services

If you are a miner means you mined some bitcoins then you sold them to someone for buying goods or services. The amount or value you received by selling your bitcoins Will be taxed as a personal or business income after any expenses incurred in the process of mining.

Expenses like cost of electricity or used computer hardware during mining. If you mined 5 bitcoins and you sold them at a price of $500 each then you have to give tax for a total of $2500 .

That was for if you are mining bitcoins.

Now come to another point, that is if you invest your money in bitcoins or you bought them at a certain price . Then after some time you sell them at a profit then you also have to give a report of it and your gain profit will come into tax.

Now come to point of tax rates,

SHORT TERM OR LONG TERM

Assume,you have bitcoins and you are investing or exchanging them for short term ,then short term capital gain tax is applied and if you invest or exchange as a long term then long term capital gains tax will be applied which is equal to the ordinary income tax rate for the individual.

Income tax rates are different in different countries as their government decided.

How many tried to escape from paying tax .

Is there any proper way to prevent himself from paying taxes,so let's talk about this.

LET'S TALK ABOUT TAX RATES IN USA ON BITCOINS :-

In the USA,tax rates are zero for long term capital gains with taxable income less than $78700.

Any many more offers given the US govt to their people like they make it easy to pay tax for a widow that she will pay 15% with taxable income between$78,700 and $434,550(approx).

For People who trade in Bitcoin,it is not easy to pay tax. Because Bitcoin doesn't have any fixed value but the value of Bitcoin swings each and every second up and down.

So Internal revenue services motivate the consistency in their reports that if you purchased Bitcoin at high value you should sell it at same or wait for the same.

In USA many people who have interested in buying or selling bitcoins use these tricks to avoid tax paying

• They invest their bitcoins in their life insurance policy

• They bought cryptocurrency as an IRA.

So these are .