Nostr Web Client

Here’s a question for the more advanced #BTC enthusiasts out there:

I’ve been hodling various cryptos in a self-custodial manner for years, so I’m not completely new to the world of #crypto.

Initially, when I knew even less than I do now, I tried day trading to get a feel for things, thinking it would lead somewhere. While I didn’t make a loss, it didn’t take long to realize all I was doing was generating a crazy number of meaningless taxable events with little to show for it. That’s when I switched to a HODL strategy.

In the meantime, an increasing number of vendors and service providers have started accepting BTC and other cryptos. Even #NOSTR seems to be promoting the use of BTC in everyday life via the Lightning Network.

That’s all great and definitely the way forward, but how do you guys—especially in the US, where crypto is considered property rather than currency—deal with the attached tax admin nightmare? Creating a taxable event every time I buy a pizza seems to create more hassle than it’s worth.

Does anyone have any tips or tricks for integrating small BTC payments into everyday life without creating an administrative #tax nightmare? How do you keep track of transactions? I’m not asking for loopholes or anything illegal; I just want to know how others manage it and whether I’m overcomplicating things.

Reply to this note

Please Login to reply.

Discussion

Ronin 1y ago

I'm in the EU, in my country the law says we should fill taxes if you sell bitcoin in less than a year. In practice selling some sats, you can buying some stuff with bitcoin, no one cares, we don't fill them.

GlitchyFren 1y ago

Interesting. Thanks. Over here gifts of up to 15k per person per year are allowed so flashing back and forth is no problem. But as soon as it gets commercial (say buy a coke for BTC) you have to declare your capitial gain (or loss) 🤦🏻 In fact, even exchanging one crypto for another is already a taxable event.

Silner 1y ago

I don't thiink they could expect every small #lightning transaction recorded anyway could they?

As some of it would be offchain how would you provide evidence?

I think it's probably only substantial trades that matter.

Aside from that, was it #Japan that made a special classification for #crypto, not property or currency?

GlitchyFren 1y ago

Technically it’s every trade, no matter how small. In the US anyway. Small gifts are fine but if you swap or buy stuff yeah that’s classified as a #taxable event here. The problem is with all that #KYC shit any kind of crypto movement is recorded. Now will they go after the smallest stuff? Prob not. On the other hand, it could be a great excuse to have you audited.

Kevin 1y ago

This really depends. Are you dipping into your stack to pay these transactions?

My best advice came from Saylor a year or so ago:

Say I want to tip a waiter/waitress in #Bitcoin, I have my lightning or liquid wallet preloaded with sats, I go on an exchange and buy $20 worth, and then however many sats that gets me, I send it to him/her. This doesn't create a taxable event because I bought and gave it away same day for exact same value.

I do the same thing with purchases. I pre-ordered nostr:npub1gdu7w6l6w65qhrdeaf6eyywepwe7v7ezqtugsrxy7hl7ypjsvxksd76nak gold standard book. Bought the $30 of Bitcoin and then sent the lightning payment to him. No taxable event.

The only time you need to keep track is with your cold storage purchases that you sell. For that I usually keep a spreadsheet. Or have to look at the exchanges where I buy and calculate that way.

GlitchyFren 1y ago

I see. Yes I keep these things separate. I don’t touch anything in cold storage. It’s like wine in the cellar.

Technically a same day non gift transaction (tip can be classed as gift) is still a reportable event here but I begin to feel the consensus is don’t bother about tiny amounts even if they are non gift transactions. I guess it’s a YMMV thing. Thanks.

senf 1y ago

You're right that those are taxable events still. If you want to have a recipient receive Bitcoin without a taxable event on your side, you can send from your dollar balance in Strike to a lightning invoice or Bitcoin address.

GlitchyFren 1y ago

Good idea. So do you declare peanut amounts?

senf 1y ago

It's not declaring peanut amounts, it's just not taxable for you at all. You're sending dollars. The taxable event is 100% on Strike's side and they track all that (again, for themselves, not for you) as part of their business.

GlitchyFren 1y ago

Oops sorry. My question wasn’t clear. What I meant was, when you do occasional small scale crypto to crypto stuff (say 1-10 bucks) that can’t be classified as gift, do you keep a record of those and declare them? If so, what do you use to keep track? Or do you just ignore these?

senf 1y ago

I do, yeah. I just keep them in a Google Sheet and put them on an 8949 when doing taxes.

GlitchyFren 1y ago

Thanks!

WhyCarnivore.com 1y ago

#asknostr any tax-savvy nostriches in the house?

nostr:nevent1qqsr6ryqum7efpljxrxurhzh3w3lzysl68yxngp9awdkhy3e5d7r7rgpz4mhxue69uhhyetvv9ujuerpd46hxtnfduhsygytqt4djtyd0282rqa2kjrpzt9fps07w6axsgh82w8my5h2drdlgvpsgqqqqqqs5k0my0

Accept Crypto 1y ago

In The United States, Flexa, and Strike are two platforms that let you spend your Bitcoin, and generate a tax record of it.

Flexa:

https://support.flexa.co/en/articles/3740783-are-flexa-payments-taxable-events

Strike Tax Feature:

https://youtu.be/USMri_DSSBI

Elephant in the root 1y ago

You can change tax residency to something more sensible. Paraguay is a great option for instance.

Some people just make sure to never KYC themselves using p2p trading like vexl.it and then there's no record that the government could use to track them. It's obviously illegal, but the government has no way to find out.

GlitchyFren 1y ago

They clamped down pretty good on those glorious places…

Elephant in the root 1y ago

It's a hydra. They cut off one head, three more grow.

GlitchyFren 1y ago

Thanks for the link btw, tried flashing you 👍