Tax laws

Lawmakers Introduce Bill to Improve Crypto Tax Laws – Here’s How It Would Make Consumers’ Lives Easier

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Legislation reintroduced in Congress last week by a bipartisan group of lawmakers aims to change the way cryptocurrency purchases are taxed and help clear up some of the confusion over how to account for certain crypto transactions on your tax returns. income.

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The Virtual Currency Tax Fairness Act was introduced on February 3 by Rep. Suzan DelBene (D-Wash.) and Rep. David Schweikert (R-Arizona) and is co-sponsored by Rep. Darren Soto (D-Fla.) and Rep. Tom Emmer (R-Minn.), reported Accounting Today. The bill would exempt personal transactions made with cryptocurrency when the winnings are $200 or less.

Under current tax laws, all earnings from virtual currency must be reported as taxable income, regardless of the size or purpose of the transaction. Taxpayers are required to calculate and report any change in the value of currency against the dollar from the time they purchase the currency until it is used in a transaction, according to Accounting Today.

Under the proposed legislation, taxpayers would no longer have to worry about the tax implications of small transactions – a major benefit, given the rise of crypto as a consumer currency and the confusion over the how crypto is taxed.

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“Virtual currency is reshaping our daily lives, and the United States must recognize this and strive to treat these currencies fairly in our tax code,” Schweikert said in a press release. “Outdated regulations around virtual currency disregard its potential for use in our daily lives, treating it more like a stock or an ETF… This common sense bill reduces bureaucracy and opens the door to new innovations, ultimately growing our digital economy.”

Schweikert, Emmer and Soto co-chair the Congressional Blockchain Caucus, a congressional group that includes 35 lawmakers, Forbes reported. The caucus aims to simplify tax laws involving virtual currency and make it easier for investors and consumers to use — something industry officials have been pushing for as cryptocurrency becomes a bigger part of the financial mainstream .

“While Bitcoin and other cryptocurrencies are technologically innovative payment methods, today you need to track and report every transaction you make using them, whether it’s a $10,000 investment or whether you buy a 99¢ song online or a latte at a coffee shop,” Jerry Brito, executive director of cryptocurrency think tank Coin Center, said in a statement. friction and puts cryptocurrencies at a disadvantage compared to other digital payment methods.”

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The proposed bill will “create a level playing field” and “help unleash innovation on applications such as micropayments, which can consist of dozens of transactions per minute and are therefore difficult to reconcile with current law” , added Brito.

Kristin Smith, executive director of the Blockchain Association, an industry trade group, said the new laws are particularly important as more consumers make retail purchases with crypto. Retailers now allowing bitcoin payments include Whole Foods, Starbucks, Home Depot, Overstock, and Etsy.

“As the use of virtual currencies for retail payments increases, it’s important that Americans can easily understand their tax obligations,” Smith said in a statement. “By providing an exemption for small daily purchases, the Virtual Currency Tax Fairness Act would ease this burden on consumers.”

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About the Author

Vance Cariaga is a London-based writer, editor and journalist who has previously held positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work has also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal, and Business North Carolina magazine. He holds a BA in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting has earned him awards from the North Carolina Press Association, Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A North Carolina native who also writes fiction, Vance’s short story “Saint Christopher” placed second in the 2019 Writer’s Digest short story competition. Two of her short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. Her first novel, Voodoo Hideaway, is published in 2021 by Atmosphere Press.