The tax filing period in the United States begins every January. The deadline for filing personal income tax is April 15th. Unfortunately, this period is also a period in which the price of bitcoin is less rising or weaker than at other times. Experts say this is not just a coincidence.
In the seven years from 2014 to 2020, Bitcoin prices fell four times in January and six times in March. According to Delphi Digital, the average losses in January and March were 5.24% and 12.59%, respectively.
Delphi Digital analyst Paul Bollage said, “In the past, the price of bitcoin during the US tax filing period was often lower than in the rest of the year. It’s difficult, but it’s important for us to address.”
Currently, the price of Bitcoin is trading at around $31,751. It has fallen 1.22% over the last 24 hours. The price of bitcoin also fell below $30,000 today around midnight. Bitcoin is the largest cryptocurrency based on market capitalization.
According to Delphi Digital’s January Bitcoin Outlook report, one of the biggest reasons for the decline in Bitcoin prices during the U.S. tax filing period is “Because bitcoin investors and traders who made significant profits from investing in various crypto assets in the previous year have to dispose of some of their holdings in order to pay for the tax owed.”to be.
“It’s hard to know exactly how much bitcoin is being disposed of. Different states have slightly different tax bases for capital returns. But last year, the market capitalization of Bitcoin alone rose more than $400 billion.
Investors and traders cashed out a significant portion of last year’s earnings or reinvested in other cryptocurrency products, all subject to taxation.” – Kevin Kelly, Delphi Digital Co-Founder
At the end of December last year, the U.S. Internal Revenue Service (IRS) distributed a taxpayer’s guide to questions about cryptocurrency newly included in their tax return. Unlike in 2019, the 2020 tax return included a’yes, no’ question about cryptocurrency on the first page (“Accepting, selling, sending, exchanging, or other financial gains in cryptocurrency Have you ever acquired?”).
The National Tax Service stated in the taxpayer’s notice that’virtual currency purchase’ is also regarded as a transaction dealing with virtual currency.
Possibility of taxation of unrealized capital income
Recently, finance minister Janet Yellen suggested that unrealized capital returns should also be taxed. If Minister Yelan’s proposal is realized as it is, the return on investment in cryptocurrency will also be affected.
Last week, Tradeblock’s Director of Institutional Research, John Todaro, told CoinDesk that taxation on unrealized capital returns would have some impact on almost all investment assets. TradeBlock is a cryptocurrency analysis company, a subsidiary of CoinDesk.
In addition to this, the Biden administration’s tax policy includes content that could affect cryptocurrency investors. One of them is to “apply a general income tax rate of 39.6% to long-term capital returns and dividends that meet conditions for returns of $1 million or more”. Investors with large cryptocurrency investments are likely to be affected.
· Translated by NewsPeppermint.
For reports and press releases, [email protected]