According to a report from Credit Karma, US bitcoin investors who decided to exit the bitcoin market lost $1.7 Billion. Unrealized losses, belonging to those who didn't sell, account for $5.7 billion.
Credit Karma GM Jagjit Chawla believes many Americans don’t know they can qualify for a crypto tax reduction as a result of their losses.
“Even though those who sold their bitcoin at a loss can typically claim a tax deduction we found that before taking our survey, 61% of respondents who lost money on bitcoin didn’t actually realize they could get a tax deduction for bitcoin losses."
A US citizen who locks in their crypto losses could claim up to $3,000.
Anything over that amount can be carried over to next years' tax returns, offsetting potential gains tax.
Selling Bitcoin "a Taxable Event"
Many bitcoin investors and traders don’t know that selling bitcoin could be considered a taxable event. While most people are aware of the potential ramifications of underreporting income, what many don’t know is that not reporting losses could result in missing out on valuable deductions.
With crypto investors suffering losses throughout 2018 as prices fell by up to 90%, this seems fairly important.
TaxToken - Streamlining Crypto Tax
TaxToken is a BaaS startup that assists investors and traders keep track of their crypto tax.
Incorporating blockchain technology and artificial intelligence, TaxToken can automate the crypto tax filing process.
This means quick, easy, and mistake-free crypto tax filing.
TaxToken co-founder Nathan Nichols recognizes the issues many people have had when dealing with crypto tax.
"TaxToken was founded on one principle - it shouldn't be difficult to file your cryptocurrency taxes. TaxToken is humbled and excited to officially launch our cryptocurrency accounting software and play our role in developing the blockchain ecosystem.”
By automatically syncing with users exchanges and wallets, TaxToken provides an easy to use system that imports ICO’s, trade history, airdrops, mining, and payments.
The information is then available on an easy to read dashboard that offers users a complete review of their transactions, which are available for download.
The Credit Karma report suggests that investors who are made aware that they can deduct losses are more likely to take the steps needed to file their crypto tax, even if they lost money.