Because Tax Day is fast approaching, tax payers’ apprehension is already tangible. For cryptocurrency holders who don’t report their earnings from cryptocurrency, this level of apprehension is most likely higher than the average tax payer.
Recently, the Internal Revenue Service has made it clear that they will be focusing more on people who do not report their cryptocurrency earnings on their taxes. Despite this and other previous warnings, a high percentage of American crypto holders are willing to take the risk, a survey shows.
The survey, conducted by TeamBlind, interviewed 2,600 respondents who had said that they earned money through cryptocurrency in the past year. They were specifically asked if they reported their earnings on their taxes. The survey ran from April 5, 2018 to April 12, 2018 and the results had shown that 46% of the respondents answered ‘NO’.
In relation to this, previous researches and surveys had been conducted regarding cryptocurrency holders and their tax records on the earlier part of this year. One of these is a survey done by research firm Qualtrics which revealed that more than half (57%) of 2000 people gained a certain amount from cryptocurrencies throughout 2017. Meanwhile, a report from tax firm Credit Karma shows that less than 1 in 250 people report their gains or losses from cryptocurrency in their tax forms.
So what actually happens if I don’t pay my taxes on cryptocurrency?
Should you decide not to declare your profit from crypto, and the IRS discovers, you will be subjected to Tax Evasion. This means you may be in prison for up to 5 years and may be fined for up to $250,000. For a more detailed discussion regarding this, you can read the IRS-issued warning here.