Tax season is rapidly approaching. However, a recent survey indicates that many cryptocurrency investors do not plan on reporting their losses.
The survey, which was conducted in November 2018 by the research firm Qualtrics on behalf of the company Credit Karma, was taken by 1,009 American Bitcoin (BTC) investors. Those surveyed reported BTC holding losses that totaled $1.7 billion in 2018. However, results indicate that most investors do not plan on reporting their losses.
Typically, an investor who has lost money on an investment will claim the loss as a capital loss deduction on his or her taxes. But the survey suggests that cryptocurrency investors may be an exception. 35 percent of the participants that sold their Bitcoin at a loss said they will not report their losses on their tax returns. 53 percent of surveyed investors indicated they would report their Bitcoin gains and losses.19 percent of the participants were undecided.
Investors that don’t report their BTC losses may miss out on valuable deductions, as capital loss deductions allow investors to offset the taxes owed on their investment gains.
The reasons given for not reporting BTC losses varied. 35 percent of those surveyed believed they were not required to report their profits or losses, and 58 percent of the participants said they were not aware they could claim a tax deduction for their losses. Over half of those who claimed they will not report their crypto losses reported that their gains or losses were not enough to require reporting.
In April 2018, it was reported that out of Credit Karma’s 250,000 most recent tax filers, only 100 reported capital gains from cryptocurrency investments.
In October 2018, a US Internal Revenue Service (IRS) advisory committee asked the agency to provide additional guidelines for the taxation of crypto transactions.
In the US, the deadline for submitting individual income tax returns is April 15th.