Crypto Tax: What a funny topic. But here’s the good news. According to a recent survey, US cryptocurrency investors are actually doing their best to pay their taxes on their crypto gains.
With Tax Day 2022 a little more than a month away in the United States, CoinLedger has released its ‘State of Crypto Tax Reporting’ survey for 2022. It was organized in partnership with YouGov.
CoinLedger is a tax-reporting platform geared towards users of cryptocurrency, DeFi, NFT and Web3.
The survey was commissioned to try to understand the current issues associated with cryptocurrency taxes in the US. The survey asked investors whether they currently report and pay taxes on crypto. If they didn’t, why?
Crypto Tax: It’s Complicated
While most people who worked to pay taxes on their crypto didn’t, not everyone made it work. According to the survey, some US crypto investors are still confused about reporting taxes.
Investors gave a clear message that they want to pay taxes. But, they ‘did not know that crypto was taxable’ (25 percent). 20% said they ‘did not know how to report crypto on their tax return’.
The general belief that crypto investors want to avoid paying taxes is an age-old idea. 50% actually happily paid tax on their crypto. In comparison, only 15% claimed to have intentionally avoided paying taxes. He gave reasons like ‘the government doesn’t know about my cryptocurrency’ or ‘I don’t want to pay taxes’.
Man, 0% of us want to pay taxes.
Other reasons for non-payment of taxes on crypto include ‘the lack of proper software tools for their crypto transactions.’ About 30 percent reported that they are having trouble ‘keeping track of their capital gains and losses’.
Age may be a factor. As mentioned in previous studies, cryptocurrency is most popular with a younger demographic. These new users are new to investing. They are not as knowledgeable about tax reporting obligations.
David Kemmerer is the CEO of Coinledger. “Many factors greatly influence the ability of investors to accurately track and report taxes on their digital assets. Confusion is not a valid reason to avoid paying their taxes. But it is a problem for digital asset investors. has become a reality. New tax laws are coming into force. These coincide with a growing number of US states and international charities already accepting digital asset payments. This simple, user-friendly crypto tax and makes the need for accounting software all the more important, especially for DeFi users.”
American policymakers are not convinced to understand the industry.
It is nothing new for Americans to have a lack of confidence in their elected officials. And this was seen in the survey. More than two-thirds of crypto investors do not believe that the politicians and regulators who drafted cryptocurrency laws really understand the industry.
Kemmerer said, “There is an urgent need for regulators to implement a fair and effective crypto tax policy, not only in the US but globally. Our survey showed that the number of crypto investors who are reporting it on their taxes , have increased since 2018. Still, the industry has a long way to go from a regulatory standpoint. This is especially true when it comes to bridging the gap between law-abiding crypto investors and those who avoid them. When it comes to lack of understanding, overall confusion or otherwise.”
Let’s remind ourselves that if paying taxes on crypto gains turns out to be too high, there are countries you can go to that don’t tax crypto at all.
Happy Crypto Tax Day!
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