Bitcoin is the leading cryptocurrency anywhere in the world, including in the U.S. Millions of people and institutions are using Bitcoin today.
Whether it is for buying, selling, or trading, Bitcoin’s uses are varied, hence its attractiveness. Bitcoin holds value because its supply is limited while the demand is high and ever-growing.
Today, cryptocurrencies like Bitcoin have become more common. Many people and institutions are now using Bitcoin for different purposes.
The growing popularity of these digital currencies has a significant impact on investors and nowadays you can use Immediate Edge to trade in bitcoin.
Can the IRS Trace Your Bitcoin? Bitcoin and IRS
Recently, the government, through the IRS, has been keen on introducing specific regulations for Bitcoin.
Although the government does not consider Bitcoin legal tender, it has imposed particular rules on its use. Overall, the IRS has been very stringent in ensuring it keeps track of Bitcoin transactions.
Traditionally, the IRS adopts the voluntary compliance notion in matters of taxation. It implies that the IRS anticipates that every taxpayer will report all taxable income and transactions in line with the law.
Failure to do so, the IRS has mechanisms to find out and meet the appropriate penalties.
The same case applies to Bitcoin. The IRS considers Bitcoin an asset. And like other traditional assets, Bitcoin users should pay capital gains taxes.
Therefore, the IRS expects every cryptocurrency user to report their Bitcoin transactions like all other taxpayers. Failure to do so could prompt the IRS to come for you.
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Take Away: Can The IRS Trace Your Bitcoin?
The IRS can track your Bitcoin easily.
While some Bitcoin users may assume that their Bitcoin transactions are under the radar of the IRS, they may be shocked when the IRS discovers them and their Bitcoin.
Essentially, increasing regulations on Bitcoin and other cryptocurrencies makes it easier for the IRS to monitor Bitcoin activities.