Bitcoin is often in the news as of late, leaving many to wonder: The value of bitcoin fbar reporting blew sky high for a while, begging the question of whether it is a currency or an investment. However, in the context of taxes, bitcoin fbar reporting IRS has decided that bitcoin will be treated as a capital asset like a share of stock rather than a currency. In short, when you sell your bitcoin, the taxes will fall under capital gains rules.
Since cryptocurrency is a newer phenomenon, the IRS has not provided guidance on a bitcoin fbar reporting of the issues yet.
Some experts are recommending that taxpayers take precautions and bitcoin fbar reporting it, since if they do not, they could be surprised with accusations of willful nondisclosure. Reporting your account on your FBAR is not a taxable event, but failure to report it could lead to penalties. Expats would almost certainly need to report it on FATCA Formassuming the value surpassed the filing thresholds.
Taxpayers who are prosecuted due to hidden overseas bank accounts typically are charged with two felonies: In the past, the sentencing guidelines for tax violation were often used in these instances — resulting in a lenient sentence. In Octoberthe Justice Department announced that in the future the FBAR sentencing guidelines will be used, meaning harsher sentences will be imposed. The IRS created the OVDP as an amnesty program to help taxpayers hiding foreign assets become tax compliant without facing criminal prosecution.
However, the last day this program is available will be September 28, After that, anyone willfully hiding foreign assets will not be able to avoid prosecution. Bitcoin fbar reporting American tax code is many things, but it is not intuitive. Expats are often surprised by the fact that they still have tax reporting requirements years after they moved to a new country. Since bitcoin fbar reporting is bitcoin fbar reporting new development in the tax world, it may not occur to some taxpayers to report profits realized from the cryptocurrency or report account balances via the FBAR and FATCA.
The nightmare scenario would be an expat, unaware of filing obligations, found to have willfully hidden foreign assets and then subjected to huge penalties with criminal prosecution as the cherry on top.
If your failure to file was non-willful, you can use Streamlined Filing Procedureswhich will drastically reduce the amount of penalties levied. The best course of action is to speak with an bitcoin fbar reporting familiar with FBAR and expat reporting requirements as soon as possible. Greenback accountants are familiar with the many moving parts involved in expat taxes. Contact us todayand get your questions answered! Owning bitcoin or other cryptocurrencies could affect your expat taxes in some ways you may not expect.
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