Making Crypto Tax Free
Apr 11, 2018 Posted / 357 Views
The mining of cryptocurrency has always been the initiator for not one, but so many things. What is most interesting, however, the mining part of it. Mining is one of the most dominant things in the crypto market and getting hands on some good cryptocurrencies, and the life is set.
For many cryptography and developers mining is something which has become a thriving business and calls for a lucrative future in this world of stocks. As mining and dealing in cryptocurrency has become tough, the miners look for advantage towards tax exemption.
Many internal revenue services treat mining and its related income generation as business money and hence charge tax on it, even for miners who run small scale. If the mining revenue is more than $400, then it has to be reported to the revenues and to be paid tax on.
Under this, miners have to report every payment coming in from every single bitcoin has to be accounted for, at the market value it was purchased for. Not just this, but even if the cryptographer has their mining equipment they have to report it too. This is because of the Schedule C of the tax return. The net income on a Schedule C is subject to ordinary income tax plus a 15.3 percent self-employment tax.
However, people have their way out. For people who have their mining sets, prefer to buy and register it with some company so that they are treated as business entities so that it is not taxed upon by the individuals.
These tax benefits can be carried through especially for these crypto miners, and carry substantial value.
It is ideally advised to be very careful about the returns formed and hence, it is important to evaluate these issues wisely with proper consideration. Business entities also generally have a lower instance of audits than self-employed Schedule C filers.
Expense and Loss Formed
If mining is done the right way, then it is quite profitable, more than anything. But, cryptocurrency mining is something too sophisticated which is to be carried out with proper intelligence and knowledge of everything- all the equipment and technology.
What people complain the most is that cryptocurrencies often take up so much of money, which majorly goes in electricity and hardware for operation. This probably creates issues for miners who live in secluded regions. A few cents per kilowatt-hour can mean the difference between profit and loss.
And hence, for miners who have access to cheap electricity and mining tools create for themselves a platform where they achieve everything simple and easy.
So this tax exemption is necessary for all miners so that they can at least afford electricity for themselves to carry out these operations.
Investment in Business
Eventually, the goal of mining is to provide blockchains with the necessary building platforms which also in return contributes in profit and loss for the miners, and this profit is developed on the market values of whichever cryptocurrency they are dealing in.
What happens most of the time is that cryptocurrency miners mostly focus all their resources on coins which have a good return on investment or a good return value. And since it’s a known fact now that some crypto coins offer higher rewards for miners than others, mining operations sometimes swap their mined cryptocurrency to another crypto that they prefer to hold on to.
Here the tax exemption is helpful during the swap, to maintain the price difference and profit generated.
But again, there are so many of these things and reasons that happen that it is merely difficult to contain them with a simple explanation.
So what we can deduce is that the mining community is in great need of tax exemption and if given, a lot of new and fresh changes can be seen!
Applancer is an open platform for discussion on all things like Blockchain , Cryptocurrency and Ico news updates. As such, the opinions expressed in this article are the author's own and do not necessarily reflect the view of Applancer .
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