A bill seeking to exempt personal crypto transactions taxes for capital gains has been reintroduced in the Congress of the United States. It would create an exemption for low-value cryptocurrency transactions in daily use. What are the odds that the reintroduced bill will be accepted?
17 January, 2020 | AtoZ Markets – Representatives David Schweikert (R-AZ) and Suzan DelBene (D-WA) presented the bill, 16 January. Representatives David introduced an earlier version of this bill in 2017, which featured a substantially larger exemption. The bill would address the problem by merely treating cryptocurrency in a similar way to any other foreign currency.
Also, it would establish an exemption for virtual currency expenses that qualify as personal transactions (The Virtual Currency Tax Fairness Act of 2020). Such as a person spending crypto on daily expenses. This natural solution to an obvious problem with today’s tax treatment of cryptocurrencies would help level the playing field for this technology.
Exempt Personal Smaller Crypto Transactions Taxes
Current tax law is struggling to deal with cryptocurrencies, as it sometimes acts as investments, commodities, and other currencies. The bill seeks to simplify this last type of transaction for crypto traders and users.
Currently, the IRS may hold crypto users responsible for paying taxes on earnings, relying solely on their crypto value at the time of purchase. Such a system would make use of crypto as an incredibly bulky currency within the United States.
The new bill would exempt taxpayers from a reporting obligation as long as the earnings are less than $ 200. It would only apply in the case of major purchases or wild bull markets. But, the previous version of the bill put this number at $600.
Taxation of Cryptocurrencies Is a Critical Point in the US
The bill would place a new category within the existing IRS exclusions from classification as gross income. Moreover, the bill states:
“An individual’s gross income must not include the gain from the disposition of virtual currency in a personal transaction. The previous sentence won’t apply if the capital gain that would otherwise be recognized on the transaction exceeds $ 200. “
If approved, the bill will cover transactions that will take place after 31 December 2019. Taxation of cryptocurrencies has proven to be a critical point in the United States. In December, eight congressmen sent a letter to the IRS asking the tax agency to clarify the rules for tax returns. Last year, representatives sent a similar letter to the IRS, who were also dissatisfied with the current clarity.
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