This comes as a result of many investors not reporting their real gains in cryptocurrency. For this reason, the Internet Revenue Service in the United States (IRS) has sent out many letters to crypto investors reiterating the fact that they have pending taxes on their unreported profits from cryptocurrency. This was the case last year, where the IRS saw the need to send out notices of tax evasion to crypto-investors.
It had come to the notice of the IRS that several crypto investors recorded the wrong tax returns information from what was filed with the IRS. Thus in a CP2000 notice by the IRS sent out to individuals of the CryptoTrader.tax provider service, the taxation institution is out to get any trader filing in the wrong tax returns or evading taxes.
At times, people often get the false notion that cryptocurrencies are not part of the forex markets. Yet, it is. Cryptocurrencies fall under the fintech branch of the financial markets, and there is a wide range of them including Coinbase, Bitcoins, Ethereum, and a whole lot more. And forex brokers, as well as traders, are worried about the effects of the IRS confusing the 1099-K statistics for a trader’s real tax returns, when in fact it records a whole lot of information and numbers including the losses made by the investor, making it difficult for the IRS to actually identify what the real tax returns of the traders are, using the 1099-K method, leading them to think that traders are evading taxes. The problem with it according to this Forex Trading Bonus website is that many traders could get into trouble with the 1099-K analysis and might find themselves with the burden of proof to the IRS, trying to indicate that they are not evading taxes to avoid paying more for their real income.
The CEO of CryptoTrader.Tax, David Kemmerer made some comments, saying that 1099 was not supposed to be a form of reporting the income from cryptocurrency. He further said that the 1099K was designed for crypto investors to receive payments from businesses such as Etsy, Lyft, and Uber directly with Coinbase using the 1099K as a way to report their earnings from customers.
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