Taxation is the core driving principle of governments across the world and one of the biggest sources of income for the governments. With the US Tax Season at its peak (the last date to file tax returns being April 15), there’s a buzz among the businessmen. Filing for taxes is often considered to be a complex procedure. It gets even more complex when you consider the modern day scenario with cryptocurrencies coming into the picture.
America’s Internal Revenue Service (The IRS) considers Bitcoin transactions as a 'sale of property'. Thereby, the profit or loss that you make during these transactions are considered as capital gains taxes. As cryptocurrencies make taxation even more complex, BitPay has introduced multiple tools which help their users with a simple and easy calculation of their cryptocurrency taxation details.
Simplifying Taxation for Merchants Accepting Bitcoin Payments
For those merchants who accept payments in Bitcoin or Bitcoin Cash - BitPay creates and files a 1099-K form for them. However, this is only possible under the conditions:
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The business has had BitPay process a minimum of 200 transactions that year
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The business has had over 20,000 USD worth of transactions processed by BitPay
If both these conditions are met with, BitPay would create and file a 1099-K form for your business. BitPay would automatically adjust it for the USD value at the time each invoice was created - making it extremely simple to show these transactions in their accurate value and calculate gains or losses.
CSV Export Feature in the BitPay and Copay Wallets
Those who are using either the BitPay or the Copay wallet to make Bitcoin or Bitcoin Cash transactions can easily use the desktop version of either of these wallets to generate and export the CSV file of all their transactions. In order to do this, the following steps need to be followed:
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Open the wallet
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Head to Settings
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Select between Bitcoin wallet and Bitcoin Cash wallet
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Head over to More Options and then choose ‘Transaction History’
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Select Export to File
The exported CSV file can then be converted into a Google Sheets file or a Microsoft Excel file. The ‘Description’ column in the generated CSV can help you identify which of these transactions are taxable.
The BitPay Card
Interestingly, the BitPay Card makes all transactions in US Dollars and does not involve Bitcoins or Bitcoin Cash payments. All the purchases, as well as ATM withdrawals made using the card, are in the form of US Dollars. Simply put, it means that the BitPay Card won’t require you to do anything extra for taxation purposes.
However, the only thing that you need to keep in mind with the BitPay card is that when you load the card with Bitcoin or Bitcoin Cash (which get converted into US Dollars), this transaction will be considered as taxable under the Digital Currency Tax Guidance of the IRS.
Conclusion
To conclude, BitPay is providing their users with some really amazing and helpful tools to simplify their tax filing process. However, even with these amazing services that they provide, it is always recommended to have your taxes filed with the help of a tax professional in case of even the slightest confusion!