Many people are wondering which crypto exchanges do not report to IRS. The answer may surprise you. Keep reading to find out which exchanges are safe from IRS reporting.
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IRS and Crypto
If you’re like most people, you probably don’t want to get on the wrong side of the IRS. So, it’s important to know which crypto exchanges do not report to the IRS. This article will list a few of the most popular exchanges that do not report to the IRS.
What is the IRS?
The Internal Revenue Service (IRS) is the United States federal government agency responsible for tax collection and tax law enforcement. The IRS is a bureau of the Department of the Treasury, and is under the immediate direction of the Commissioner of Internal Revenue. The IRS is charged with enforcing the internal revenue laws enacted by Congress, collecting taxes owed, and providing taxpayer assistance.
What is Cryptocurrency?
Cryptocurrency is digital or virtual currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of this security feature. A defining feature of a cryptocurrency, and arguably its most endearing allure, is its organic nature; it is not issued by any central authority, rendering it theoretically immune to government interference or manipulation.
Cryptocurrencies are decentralized, meaning they are not subject to government or financial institution control. Bitcoin, the first and most well-known cryptocurrency, was created in 2009. Since then, numerous other cryptocurrencies have been created. These are frequently called altcoins, as a fusion of bitcoin alternative.
Whereas fiat currency is regulated and backed by a central authority, like a bank or government, cryptocurrencies are not subject to any central control. This decentralization is one of cryptocurrency’s most appealing features for many users looking for an alternative to traditional currencies. However, it also makes cryptocurrencies very volatile and difficult to predict. The prices of both Bitcoin and Ethereum have declined significantly in 2018.
How are the IRS and Cryptocurrency related?
The IRS treats cryptocurrency as property for tax purposes and has issued guidance on how taxpayers should report income or gains from cryptocurrency transactions. The guidance provides that taxpayers who receive cryptocurrency as payment for goods or services must recognize income equal to the fair market value of the cryptocurrency at the time of receipt.
In addition, taxpayers who invest in cryptocurrency may realize capital gains or losses when they sell or exchange their investment. These gains or losses will be taxed as capital gains or losses, and the taxpayer’s basis in the cryptocurrency will be the fair market value at the time of purchase.
The IRS has also made it clear that it is willing to use enforcement tools to ensure that taxpayers are properly reporting their cryptocurrency transactions. In November 2018, the IRS announced that it had begun sending letters to certain taxpayers who may have failed to report income from cryptocurrency transactions or pay taxes on such income. The letters warn taxpayers that they may face civil penalties if they do not correct their tax returns.
The IRS’s aggressive stance on cryptocurrency taxation has led some exchanges to refuse to do business with US taxpayers. These exchanges do not want to risk being forced to turn over customer data to the IRS, so they simply do not offer service to US citizens. If you are a US taxpayer, it is important to be aware of which exchanges fall into this category so that you can avoid using them and potential problems with the IRS.
The following is a list of five popular cryptocurrency exchanges that do not serve US customers:
1) Binance: Binance is one of the largest and most popular cryptocurrency exchanges in the world, but it does not allow US citizens to open accounts on its platform.
2) Kucoin: Kucoin is another large exchange that does not serve US customers.
3) Coinbase: Coinbase is a major US-based exchange, but it does not allow US citizens to trade on its platform. Instead, Coinbase offers a separate platform called Coinbase Pro for trading purposes.
4) ShapeShift: ShapeShift is a popular exchange that allows users to trade a variety of different cryptocurrencies, but it does not allow US citizens to open accounts.
5) Kraken: Kraken is another major exchange that does not allow US citizens to trade on its platform.
Exchanges That Do Not Report to IRS
There are a few exchanges that do not report to IRS. These exchanges include but are not limited to: Binance, Coinbase, and Kraken. While these exchanges may not report to IRS, they may still be subject to other regulations.
Binance is a cryptocurrency exchange that does not report to the IRS. The exchange is headquartered in Malta and provides a platform for trading more than 100 different cryptocurrencies. Binance is one of the largest cryptocurrency exchanges in the world and has been growing rapidly since it was founded in 2017.
Coinbase is a digital asset exchange company headquartered in San Francisco, California. They broker exchanges of Bitcoin, Ethereum, Litecoin and other digital assets with fiat currencies in 32 countries, and bitcoin transactions and storage in 190 countries worldwide.
Kraken is a US-based cryptocurrency exchange, founded in 2011. The exchange provides cryptocurrency to fiat trading, and provides price information to Bloomberg Terminal. As of 2019, Kraken is available to residents of 48 U.S. states and 176 countries, and lists 40 cryptocurrencies available for trade.
Gemini is a digital asset exchange and custodian that allows customers to buy, sell, and store cryptocurrencies. The company was founded in 2014 by brothers Cameron and Tyler Winklevoss. Gemini is one of the few exchanges that are licensed by the New York State Department of Financial Services.
Gemini does not report to the IRS.
What Does This Mean for You?
The IRS has issued guidance that says crypto assets are to be taxed as property. This means that any gains or losses from buying, selling, or exchanging cryptocurrency are taxable. So, if you made any money from trading crypto last year, you need to report it on your taxes. But, which exchanges do not report to the IRS?
If you are using one of these exchanges, you may not be paying taxes on your cryptocurrency gains
The IRS recently released guidance (Notice 2014-21) clarifying that cryptocurrency is to be treated as property for tax purposes. This means that any gains or losses from the sale or exchange of cryptocurrency must be reported on your tax return. However, not all cryptocurrency exchanges report to the IRS, which means that some people may not be paying taxes on their gains.
Here is a list of exchanges that do not report to the IRS:
If you are using one of these exchanges and are not paying taxes on your cryptocurrency gains, you may be subject to penalties
The IRS has challenged cryptocurrency users in court before and has won. In one case, the IRS was able to successfully obtain the records of over 14,000 Coinbase users. The IRS has also sent out thousands of letters to crypto investors, directing them to pay back taxes, with interest and penalties.
If you are using one of the exchanges listed above and are not paying taxes on your cryptocurrency gains, you may be subject to penalties. The IRS is likely to continue its crackdown on cryptocurrency investors who do not comply with tax laws.
It is important to note that even if you are not using one of the exchanges listed above, you may still be required to pay taxes on your cryptocurrency gains. The IRS treats cryptocurrencies as property, and any gains made from trading or selling cryptocurrencies are subject to capital gains tax.
If you are using one of these exchanges and are paying taxes on your cryptocurrency gains, you may be able to deduct losses
If you are using one of the exchanges that does not report to the IRS, you may be able to deduct losses on your taxes. This is because the IRS only requires reporting from exchanges that meet certain criteria, and these exchanges do not meet those criteria. So, if you are using one of these exchanges and are paying taxes on your cryptocurrency gains, you may be able to deduct losses.