Nearly Half of Americans Aren't Disclosing Their Crypto Holdings on Tax Returns

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Many Americans Are Not Reporting Their Cryptocurrency Holdings on Taxes, Reveals 42% Non-Disclosure Rate

 

Crypto holding ration on Taxes in USA

The world of cryptocurrency, like Bitcoin, has been getting more popular. In the United States, this growth is causing concerns about people following the tax rules.  BanklessTimes, a crypto analysis website found that almost 42% of American investors in cryptocurrency are not telling the government about the cryptocurrency they own when they pay taxes.

Alice Leetham a crypto expert from BanklessTimes, talked about this information. She said that not reporting the money made from cryptocurrency on taxes is a problem for following tax rules in the digital world. Investors need to have the right information to do their tax duties. The government also needs to understand this area better and make rules about paying taxes. To make cryptocurrency grow, people need to be clear about how they report what they earn.

Crypto holding on taxes ratio 2022/2023

Even though almost 42% of people are not saying how much cryptocurrency they have on their taxes, this number has gone down by about 4% since 2022. Last year, only 54.8% of people reported their cryptocurrency on taxes. These changes show that more people are reporting as cryptocurrency becomes more normal. In the third quarter of 2023, there were 4,128,338 cryptocurrency wallets in the U.S.

People don't report for different reasons. Some didn't make money from their cryptocurrency, so they didn't think they needed to report it. Others just didn't have enough information. About 18% of people who own cryptocurrency didn't know they had to tell the government about it on their taxes. Also, 12% of people who didn't report didn't know how to do it. The government can help by giving information to people. Only 7% of people who didn't report said they didn't want to pay taxes.

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Not following the tax rules is a bad trend for investors. If they don't report the money they make from cryptocurrency, they might get fines. The IRS, which is in charge of taxes in the U.S., is looking at rules for cryptocurrency. If people don't follow these rules, they might get fines and have legal problems. Not following the rules might also make the government look more closely at the cryptocurrency market, and this could slow down its growth.

The government is already doing something about people not reporting the money they make from cryptocurrency. Many government groups are trying to figure out how to make better rules and make sure people follow them. They want to make it clearer how cryptocurrency exchanges should report what they do. They are also giving better guidance about paying taxes on cryptocurrency.