November 29, 2021

Some Cryptocurrency Traders Opting for ‘Screw It’ Tax Compliance Approach

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Here’s an amusing New York Times column by Kevin Roose that features a rafter of cryptocurrency traders distressed about their tax situations. As we noted earlier this year, some crypto traders got mad/sad upon learning that taxes were a thing they had to deal with. And according to Laura Walter, aka Crypto Tax Girl, some traders have moved beyond the grief stage to denial:

Ms. Walter said she had seen clients with cryptocurrency gains as large as $400,000 who did not withhold taxes during the year and subsequently lost money trading. “Now they’re stuck with these huge tax bills, and they don’t have the capital to pay it.”

Faced with such problems, some cryptocurrency traders have decided to avoid the issue entirely, by not declaring any cryptocurrency on their taxes and hoping for the best. According to Credit Karma, which provides tax-filing services, fewer than 100 of the 250,000 people who had used the company’s tax-filing software as of February reported cryptocurrency transactions, a rate below 0.04 percent.

Sure, why not. Although I’d venture that “To hell with reporting our gains” ranks high on the scale of idiotic tax strategies. Still, one consultant quoted by Roose says, “No one believes they’ll get in trouble,” which sounds about right.

But I suppose delusional overconfidence is precisely the trait you’d want in a cryptocurrency trader. Unfortunately, it’s not such a great characteristic when it comes complying with tax law. Best of luck, morons.

[NYT]

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