Shownotes
No one wants to pay taxes. However, in many countries, taxes on cryptocurrencies are a reality. This episode covers some of the options that you can use to handle your crypto tax needs.
Following are crypto tax software sites I mentioned in the podcast.
-- Not an endorsement! --
Podcasting 2.0 Apps Available at http://newpodcastapps.com/
I can be reached by email at mcintosh@genwealthcrypto.com and on twitter at @McIntoshFinTech. My mastodon handle is @mcintosh@podcastindex.social. Looking forward to hearing from you!
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Music Credits
Protofunk by Kevin MacLeod
Link: https://incompetech.filmmusic.io/song/4247-protofunk
License: https://filmmusic.io/standard-license
The following music was used for this media project:
Music: Ethernight Club by Kevin MacLeod
Free download: https://filmmusic.io/song/7612-ethernight-club
License (CC BY 4.0): https://filmmusic.io/standard-license
Artist website: https://incompetech.com
Transcripts
Hey everyone, I want on this video to thank you for watching, and I'll see you in the
Speaker:podcast
Speaker:podcast, I'm your host McIntosh.
Speaker:Today we're going to be talking about taxes.
Speaker:Now first of all, I know taxes are not something people like to talk about, but I do believe
Speaker:it's important, and especially this time of year.
Speaker:This is probably a topic that we will revisit yearly in the first quarter.
Speaker:At least in the United States, our tax day is April the 15th, meaning we're supposed
Speaker:to have all our paperwork filed.
Speaker:And some people have no idea how they're supposed to handle taxes with crypto.
Speaker:Unfortunately, until just the last few years, the IRS didn't have any guidance about it.
Speaker:They did come out, I think in 2016 or 2017 and said, basically it's a 30% capital gains
Speaker:tax anytime you do anything with your crypto, essentially, buy or sell or trade or whatever.
Speaker:And they've even come out more recently and clarified some things like staking, which
Speaker:weren't around back then.
Speaker:They have said that with staking that you only have to pay a tax on that when you sell
Speaker:the coin that you generate by staking.
Speaker:So in other words, if I had 32 ETH that I were staking and I'm generating roughly two
Speaker:ETH every year with that, and if I hold onto those for five years, I got 10 ETH and when
Speaker:I sell them at the end, that's when I get taxed, not as it's being generated.
Speaker:When you calculate a capital gains tax, it's the difference between the buy price, so to
Speaker:speak, and the sell price.
Speaker:Maybe with staking, it's just considered to be free.
Speaker:You don't really buy it.
Speaker:You just tie up lots of capital to do it.
Speaker:That's probably the case actually, I don't know offhand.
Speaker:But anyways, historically, at least in the United States, crypto taxes have been very
Speaker:complex, certainly not something the average person would want to do.
Speaker:And CPAs don't have a whole lot of experience in this area.
Speaker:You are starting to see CPAs who specialize in crypto.
Speaker:I actually talked to one late last year, and they would basically do our taxes for us for
Speaker:something around like 1200 bucks.
Speaker:Back in 2017, when I did a lot of trading during that bull run, I think it was cryptotax.com.
Speaker:I think that's who it was.
Speaker:And basically, they're just CPAs who specialize in crypto on a website.
Speaker:So you ship off your stuff, they do all the work, and then they send you a bunch of paperwork.
Speaker:And it is unbelievable.
Speaker:I'm not a day trader.
Speaker:I don't make multiple trades per day normally.
Speaker:And just from what I did in 2017, I generated literally like half inch of paperwork that
Speaker:I had to file with my taxes, unbelievable.
Speaker:So I would love for it to be a lot simpler.
Speaker:There's countries like Portugal that they have no capital gains tax, so you don't have
Speaker:to worry about that.
Speaker:Buy, sell, trade, whatever, there's no capital gains.
Speaker:Would be awesome to live there.
Speaker:Unfortunately, I do not.
Speaker:So that's all well and good.
Speaker:I do believe, I've talked a bit in the last few episodes about regulation, and I think
Speaker:as the United States and other countries gets more regulation, these rules will become clear.
Speaker:I hope they become simpler.
Speaker:In fact, for an example, I saw a recent bill.
Speaker:They're proposing that if it's a purchase under $200 by Bitcoin, that there's no tax
Speaker:because it's Bitcoin, I don't know.
Speaker:Things like that, things to simplify things.
Speaker:If it's a currency, we have to treat it differently than it's an asset.
Speaker:I don't get taxed for using my dollar bills, and Bitcoin especially has become more and
Speaker:more of a form of currency.
Speaker:So still a lot of things to iron out there in my opinion.
Speaker:I don't know.
Speaker:We will see.
Speaker:I used to hope that the United States would move to a system like Portugal where they
Speaker:know capital gains.
Speaker:I don't see that happening at this point, but at least maybe we can make it simpler.
Speaker:But what do you do in the meantime?
Speaker:First of all, if you've been even just buying crypto, be aware, starting with I believe
Speaker:your 2021 taxes, when you fill those out this year, you have to declare that you bought
Speaker:crypto.
Speaker:So if you made purchases, you have to say you made purchases.
Speaker:If you've sold crypto, if you've traded crypto, if you bought NFTs, if you staked, it does
Speaker:get a lot more complex.
Speaker:So as I said, you've got to pay capital gains tax, then you have to calculate that tax and
Speaker:that can get incredibly complex.
Speaker:So that you have some options, your CPA might know about that.
Speaker:You could use a company like crypto tax, as I mentioned, or a CPA who specializes in crypto.
Speaker:And then beyond that, there are some basically software, well, there's some websites that
Speaker:you, they run software, and you can use those to do your crypto taxes yourself.
Speaker:I've tried Zin Ledger, I've had a bit of experience with it, it is not perfect.
Speaker:But you know, especially if you're a fairly simple setup, I mean, I have, I don't know,
Speaker:six different exchanges that I use.
Speaker:And of course, I'm doing some trading or well, I this year and last year, you know, so mine's
Speaker:a little more complex.
Speaker:But Zin Ledger would be one, Bayer, Bayer, I can never it's a funny name, though.
Speaker:It's like Bayer, Bayer tax, Bayer tax is another one.
Speaker:And they will help you with your with your stuff as well.
Speaker:And those are not as expensive, I think Zin Ledger was like less than $200.
Speaker:And basically, they're going to go to your you give them the right to access your records
Speaker:from your central exchange, or you put in your information, whatever.
Speaker:And then it figures everything out in theory and spits out the document.
Speaker:Whatever way you choose, you need to be thinking about that you may need to file an extension
Speaker:so that you can take your time.
Speaker:But this is the time of year that you know, these are things we have to think of.
Speaker:And as we are, I'm not a political person.
Speaker:But if you are electing people, if you're, you know, if you're voting or whatever, these
Speaker:are some things we need to think about is this person crypto friendly, so to speak,
Speaker:I think crypto is another chance for the United States, which is where I live, you know, to
Speaker:lead the world.
Speaker:You may live in another country and disagree with that, and that's fine.
Speaker:But if we don't have the right regulations in place and make things not difficult, then
Speaker:we won't lead we won't lead anything.
Speaker:And I think we'll lose out on a great opportunity.
Speaker:Your country may be doing the same thing.
Speaker:Portugal, for example, certainly has taken great steps towards being crypto friendly.
Speaker:No capital gains as I mentioned and you know, that's will draw the best talent in the long
Speaker:run in the next 10 to 20 years.
Speaker:The best tech talent so good for them.
Speaker:There's going to be a lot of countries that are going to be competing in the crypto space
Speaker:over the next 10 years and, you know, count countries don't need to be viewing it just
Speaker:as a cash grab, so to speak for, you know, for income.
Speaker:Unfortunately, that seems to be happening, at least in some places.
Speaker:All right.
Speaker:So pay your taxes.
Speaker:Please don't be silly and think that you can avoid that.
Speaker:Maybe you can.
Speaker:Maybe you're lucky.
Speaker:I don't know.
Speaker:My guess is if the IRS is in the United States case, if they decide to come look at you,
Speaker:they're going to find out what's going on.
Speaker:The you know, the blockchain is an open record.
Speaker:And it's a lot more difficult these days to do things without revealing your identity,
Speaker:so to speak.
Speaker:If you belong to an exchange, you're having to upload your IDs and that kind of thing.
Speaker:So all right, moving on to maybe more pleasant topics.
Speaker:All right, before we jump into the news, I want to do a real quick market overview.
Speaker:We have been going up for the last couple of weeks.
Speaker:Right now, as I'm recording this, we're actually, we've breached 45,000.
Speaker:I think we went over it and went right back under it.
Speaker:So it looks like maybe we've been at 44,000, a good portion of the day, I was actually
Speaker:thinking it was going to go backwards.
Speaker:The resistance was going to prove too much.
Speaker:We may break on through here.
Speaker:If we do, it will probably go on up to 48,000, which may prove to be stronger resistance.
Speaker:I could certainly see it getting turned around there and moving back down, you know, potentially
Speaker:down to 40,000.
Speaker:I hope not less, but it could retrace a good bit.
Speaker:So we're not out of the woods.
Speaker:Once we make it past 48, kind of the road will clear up, is what it looks like.
Speaker:Some technical analysis.
Speaker:So overall, good.
Speaker:We're not in a confirmed uptrend at this point.
Speaker:So stay safe if you're doing any trading.
Speaker:I did enter a couple of trades a couple of days ago.
Speaker:I'm still in my Ethereum trade.
Speaker:My Bitcoin trade actually got, I got stopped out at about 44,000 at 43.9 or something.
Speaker:Because I, it looked to me like it wasn't going to make it through 44 and I thought
Speaker:it was going to retrace.
Speaker:So I stood, I said a stop loss and then it kind of wicked down to it and that was the
Speaker:lowest it got, unfortunately, but that's, I'm being conservative.
Speaker:I made a small profit on it.
Speaker:Not a whole lot.
Speaker:My Ethereum is still in play.
Speaker:I've always had better luck with Ethereum.
Speaker:I don't know why that is, to be honest, but my Ethereum is still in play.
Speaker:I will probably go back in to Bitcoin again if we get above 45 until we get to 48.
Speaker:I'll, again, I'll have to monitor that.
Speaker:It'd be nice if we blew right through 48, but I don't think that'll happen.
Speaker:So certainly not financial advice.
Speaker:That's just what I'm doing.
Speaker:You can go watch five people on YouTube and find five different opinions and I've told
Speaker:you all, don't listen to one person, especially me, but don't listen to one person.
Speaker:You always need to get input from multiple people.
Speaker:Okay.
Speaker:Moving on to the news.
Speaker:Let's talk about the news.
Speaker:A couple of things I want to talk about.
Speaker:I don't know.
Speaker:Maybe this is less pleasant.
Speaker:I don't know.
Speaker:Solana had another big exploit this week.
Speaker:I tweeted about this.
Speaker:It's their wormhole.
Speaker:It's their bridge.
Speaker:So it's like a bridge between Solana and Ethereum and somebody hacked it and sent a message
Speaker:actually saying, you know, Hey, give us 10 million bucks.
Speaker:We'll tell you what we did stole $300 million worth of ETH.
Speaker:So not an insignificant amount.
Speaker:The way that it's being taken care of, so to speak, is the VCs, the venture capitalists
Speaker:behind Solana are actually paying it off.
Speaker:So they're paying the $300 million that the people that they stole, apparently they'd
Speaker:already figured out the bug or whatever.
Speaker:But I would point out that this is probably another example of the weaknesses of what
Speaker:is a centralized coin, a centralized token, a centralized crypto network.
Speaker:You may disagree with that.
Speaker:That's okay.
Speaker:But we've seen a number of issues with Solana.
Speaker:To be honest, in the long run, I still think they'll make it.
Speaker:If you like Solana, you should probably run out and buy some.
Speaker:It's at a good price right now, or it was, and, you know, it's going to go up.
Speaker:I mean, they're not going to go away.
Speaker:There's lots of things going on there.
Speaker:But I do believe at least for quite a while, they're going to continue to have problems
Speaker:like this.
Speaker:Honestly.
Speaker:Okay.
Speaker:Moving on.
Speaker:I actually want to talk about Shiba Inu now something I talk about very commonly Shiba
Speaker:Inu.
Speaker:I've owned a little.
Speaker:I don't anymore.
Speaker:And one of the reasons why I don't is because I really strongly believe that Shiba, along
Speaker:with Floki, along with Dogecoin, all of these meme coins, so-called meme coins, they don't
Speaker:show any purpose.
Speaker:At least they haven't.
Speaker:And if a token, if a network doesn't have a purpose, then it's going to go away in the
Speaker:next winter, crypto winter, what I mean by that.
Speaker:The next downturn, significant downturn of the market in 2018, after the bull run in
Speaker:2017, the market went down 90%.
Speaker:Some tokens went down basically almost 100%, like 99%.
Speaker:I think Bitcoin went down like 88% or something.
Speaker:You know what?
Speaker:Bitcoin recovered, Ethereum recovered, ADA recovered.
Speaker:They're all at all time high.
Speaker:Well, ADA is not at all time high.
Speaker:They've since gone on to all time highs, I should say.
Speaker:None of them are at all time highs right now.
Speaker:But they did that because things were happening on those networks.
Speaker:Because of the downturn, the Ethereum network was still being developed.
Speaker:The Bitcoin network was still being developed.
Speaker:And so was Cardano.
Speaker:Until recently, I'd seen very little evidence with Shiba or any of these other tokens that
Speaker:that was happening.
Speaker:Well, apparently, at least with Shiba, they are starting to do some things.
Speaker:They're having some developers that are doing actual work.
Speaker:They've got a coin burning setup.
Speaker:There's a quadrillion, I think, total Shiba coins.
Speaker:It's just a stupidly large number of coins.
Speaker:I have no idea how many zeros that is, but it's a lot.
Speaker:Well, they're starting to burn some of those.
Speaker:They've done it, I think, a couple of times.
Speaker:They're fixing to do another one.
Speaker:They're developing a bridge to get actually to move things in and out of the Shiba network.
Speaker:There's actual activity going on.
Speaker:It's not just a meme coin.
Speaker:Oh, Elon tweeted about blah, blah, blah.
Speaker:And so we're going to run out and buy it and run up the price.
Speaker:So we're seeing the price go up and it's going up pretty dramatically, actually, over the
Speaker:last few weeks since the market bottomed out.
Speaker:And I would give you a little advice.
Speaker:Do your own research, first of all.
Speaker:This isn't financial advice, but if it were me and I owned a bag of Shiba, especially
Speaker:if it was all I owned, here's what I would do.
Speaker:As the price goes up, I would watch it.
Speaker:If it reached the top, and it will, and then starts going back down, and I'm pretty confident
Speaker:we've reached a local top at least, I would sell half my bag.
Speaker:And I would sell it into Ethereum or Bitcoin, something like that, a network that has value
Speaker:and ongoing work.
Speaker:Because with the market today, we don't know what's going on.
Speaker:And people who say that they do, they're lying to you.
Speaker:We know that it's not the same as it's been the last two cycles.
Speaker:We've gone beyond that.
Speaker:So we don't know what's coming up next.
Speaker:We can theorize, we can postulate, we can guess.
Speaker:And maybe even with some accuracy and certainty, but we don't 100% know.
Speaker:And if we go back into another crypto winner and your token on a network that's not doing
Speaker:anything, it's not going to make it through.
Speaker:It's just not.
Speaker:We've seen this.
Speaker:There are 4,000 cryptocurrencies.
Speaker:Most of them are worthless.
Speaker:So don't be caught holding that bag.
Speaker:If you really believe in that token, then keep some of it, but don't put everything
Speaker:into one bag.
Speaker:Nobody should be doing that, in my opinion.
Speaker:Even if it's, I mean, nobody, unless they're just starting out.
Speaker:So that's what I would do if I owned a bag of Shiba.
Speaker:But this is actually very positive news.
Speaker:I'm not downing Shiba right now.
Speaker:This is really positive news on Shiba's part.
Speaker:All right.
Speaker:Now moving on from there, and we'll just have to keep our eye on it and see what happens.
Speaker:I mean, we don't know, but moving on from there, Ethereum, they don't have a date yet,
Speaker:but it's sounding very positive that the merge will happen, the proof of stake merge will
Speaker:happen this year, and that would be incredible for Ethereum.
Speaker:There was a developer's conference call over the last few days, and some really positive
Speaker:stuff came out of it, it sounded like to me.
Speaker:So I'm really looking forward to that.
Speaker:I think it will be a great thing for Ethereum.
Speaker:So that's something to keep my eye on.
Speaker:And something to keep in mind, Ethereum, I've said this, I don't know how many times, people
Speaker:gripe about the Ethereum gas fees.
Speaker:They are doing things to fix that.
Speaker:It will take a while.
Speaker:The reason why the gas fees are so high is because it's used.
Speaker:That's why.
Speaker:So keep that in mind.
Speaker:Do your best to avoid paying those gas fees.
Speaker:Yes, I know they can be stupid, but it's because of the use of the network that that's happening.
Speaker:So that's it actually for this week.
Speaker:You know, there's always, well, I'll throw in one more little bit.
Speaker:Actually today it was announced that I think tomorrow, later this week, there's going to
Speaker:be a new Bitcoin mining operation that they will have an ETF on the stock market.
Speaker:So that's cool.
Speaker:Another way to get involved in Bitcoin.
Speaker:This stuff is getting to be normal and that's okay.
Speaker:We're going to see more coins, more countries this year adopt Bitcoin or certainly maybe
Speaker:not as legal tender, but say, hey, we'll take it for our taxes or whatever.
Speaker:Things like what's going on down in Rio de Janeiro.
Speaker:I suspect that Brazil is going to follow suit there.
Speaker:Maybe not this year, but certainly within the next few years.
Speaker:I told my dad earlier today, I said, I suspect that this year there will be at least two
Speaker:countries that adopt crypto, some form of crypto, most likely Bitcoin, of course, as a digital
Speaker:currency, as a legal tender.
Speaker:I suspect that they most likely will either be in Latin America or Africa.
Speaker:I suspect they will be in Latin America, to be honest, if I had to make a bet.
Speaker:But it's coming.
Speaker:The adoption is coming.
Speaker:And I don't know how all this plays out.
Speaker:I don't know how the countries, all the countries who use fiat, how they convert, how that all
Speaker:works out.
Speaker:The economy, the worldwide economy, not just the United States, it's a mess.
Speaker:There's a lot of disinformation.
Speaker:There's a lot of stuff going on and it's all unraveling.
Speaker:But we have this lifeboat, so to speak, and we have this time to transition.
Speaker:And the early adopters who are us, we can benefit from that.
Speaker:So buckle up, it'll be fine, maybe.
Speaker:Oh, and it's not all rosy.
Speaker:I actually saw right before I started recording Kazakhstan, which has a number of miners,
Speaker:a decent percentage of Bitcoin miners, because of cheap electricity, is saying, hey, we're
Speaker:going to start taxing you guys and we're going to raise the price of electricity.
Speaker:So what they're fixing to do is they're just going to, all those people will just get pushed
Speaker:out.
Speaker:They'll just leave.
Speaker:They're not going to stay there.
Speaker:So I thought that was interesting.
Speaker:I don't know.
Speaker:Interesting times.
Speaker:The miners have all been in a bit of a migration of late, but yeah, the hash rate is at an
Speaker:all time high.
Speaker:So clearly the work is being done.
Speaker:So all right.
Speaker:If you like the content, I would love it if you would visit the Apple Podcasts review
Speaker:page and leave a review.
Speaker:The more reviews I have, the more visibility the podcast has.
Speaker:Tell your friends about Generational Wealth Cryptocurrency Podcast.
Speaker:Thanks for being here, everybody.
Speaker:I hope this has been helpful.
Speaker:I would love to hear from you.
Speaker:I'm on Twitter at McIntosh Fintech and you can reach me by email at mcintosh at genwealthcrypto.com.
Speaker:Of course, the Generational Wealth website is at genwealthcrypto.com.