Tax Filing Burden is Holding Crypto from Going Mainstream
Published by Kurt Kumar on
May 25, 2021 5:06:53 PM
An Introduction to Crypto Taxation
2008 was a monumental period for the United States. The country was undergoing a Great Financial Recession caused by the collapse of the housing bubble. It shook the nation’s banking and financial system to the core and affected the jobs of thousands of Americans. During this historic and tumultuous time, a person or group called Satoshi Nakamoto released Bitcoin’s whitepaper, which introduced a new paradigm on how transactions between two parties could be conducted without 3rd party observer or an intermediary.
Though it took almost a decade for Bitcoin, and crypto in general, to gain the price appreciations that we see now, its underlying impact on our day-to-day rituals, be it buying a cup of coffee or paying for a ride home, was immediately recognized by technologists around the world. Its effortless removal of middlemen in financial services and cross-border commerce was noticed by world governments as well. Regulatory entities like IRS, Finra, CFTC et al hastened to provide guidelines on this new asset class but were at odds on their definition and treatment of Bitcoin. IRS (Internal Revenue Service) eventually released documentation declaring Bitcoin and other cryptocurrencies as “property” and not as currency in 2014. It divided crypto taxes into two wide brackets;
Short-term capital gains - Gains or losses made from a crypto asset that has been possessed for less than a year would be taxed at the same rate as the income tax bracket of the individual.
Long-term capital gains - Gains or losses made from a crypto asset that has been in possession for over a year incur a 0%, 15%, and 20% tax depending on the total income of the individual and their family.
How Taxation is Hindering Crypto from Going Mainstream
One of the biggest differences between cryptocurrencies and fiat is that with fiat currency you don’t have to do any tax preparations or reporting to the IRS when you buy a cup of coffee. Because of this increased tax burden, crypto holders chose archaic outdated legacy payment methods even though these legacy systems are filled with intermediaries and inflating the final cost of goods or services sold.
Crypto Tax Calculation Burden for Shoppers
The American Government has not updated its crypto taxation rules since 2014 though top officials have recently claimed that the Biden Administration is working on a new regulatory framework that will simplify the taxation policies on cryptocurrencies. Though this is a positive step, it still does not address the problems investors, shoppers and crypto aficionados have to face with crypto documentation. Solutions like cryptocurrency tax software have come up recently that calculate one’s crypto holdings and gains/losses needed to generate necessary forms (Form 8949), but it’s still an arduous task to track crypto purchases and trades done through out the year at numerous online stores, crypto exchanges, wallets and devices. This makes documentation incomplete and renders taxation software useless and resulting forms incorrect.
RocketFuel Comes to Rescue Shoppers from Tax Prep Nightmare
In a bid to promote the use of crypto in a way that benefits shoppers, crypto payments platform RocketFuel announced that they’ll be providing crypto tax calculations and fully completed Form 8949, for free, for all their customers in the coming months.
“We believe that tax documentation should not be a barrier preventing Shoppers from using their crypto for purchases,” said Peter Jensen, CEO of RocketFuel.
“Crypto is innovation without permission. Taxation can be complex, no doubt, but our Shoppers don’t have to worry about filing their Form 8949, it will be generated on-demand. Shoppers are now free to use their crypto without hesitation” he added.
At its core, RocketFuel wants to promote the use of cryptocurrencies and help Shoppers choose payments via cryptocurrencies by removing tax documentation barrier once and for all. It is an effective solution that would propel more Shoppers to make crypto purchases. RocketFuel’s move to support their Shoppers comes at a time when no other company offers free crypto tax returns for customers concerned about privacy and shopping securely without sharing their personal information.
RocketFuel currently offers shoppers easy one-click option to pay for purchases with Bitcoin and 50+ cryptocurrencies without disclosing any personally identifiable information. This combined with their radical feature of free crypto tax calculation removes the burden and hesitation from Shoppers and instead, gives them the freedom and right to use crypto as they see fit.