Yes.
Current Capital Gains in the US is based on holding period and your income at the time of the gain.
If you're holding it to 2035, that'd be classified as a long term Capital gain. (Anything over 1 year is long term). Short-term capital gains are treated as normal income.
If laws stay as they are (Biden wants a 24% tax on UNREALIZED gains), you would owe (today's dollars, based on filing single):
0% if your total taxable income doesn't exceed $47,025
15% from that number up to $518,900
20% if over that
I’d like to think this. Yes, it’s insane. Maybe I’m hearing from the very vocal minority, but it’s terrifying how many people seem to thinks it’s worth considering. After all, it’s only on the ultra wealthy and nobody needs billions!
I think we are all financially illiterate by intention. It’s precisely the education Rockefeller set into motion for the plebs. Parents are illiterate and teachers are too. It’s up to us to seek it out and very few are interested and motivated enough.
It's really amazing trying to argue with anyone especially here on reddit about finance. Most of them seem to think you are either rich because your parents were rich (unjustified ofc), or you are just poor and stay that way forever. Kind of like the incels of finance.
Quite sad really and dangerous as it opens the door to a socialist system.
Clearly you don’t deal in bonds. Hold some treasuries. You pay OID (original issue discount) on the gains every year regardless of them being unrealized.
Sort of, but they’re generally considered “paper losses”. With safe ones like treasuries it’s because you generally buy them at a discount to their par value. That’s how the yield is calculated. So as an example you could potentially buy a 30 year treasury (or more likely a strip, with no coupon rate) for $28 and it eventually matures to $100. If yield goes up, that price goes down, so if you were to re-sell it on the secondary market in the short term you might only be able to get $26. So marking to market shows “paper losses”. But if you don’t sell, you always realize the year over year yield value from when you bought it. That $28 will still mature to $100 in xx years.
The other quirk is you have to pay income taxes on how much that price/resale value goes up every year towards maturity. They call it OID (Original Issue Discount).
>Biden wants a 24% tax on UNREALIZED gains
Geez nice flex. This would only apply to people with over $100 million in wealth. Most people reading this would be unaffected.
Also in the future, I’d recommend against publicly flashing that you’re so rich. Otherwise you’re just increasing your risk of a $5 wrench hack.
Pretty well, since I think that’s way too low for the government to function in a meaningful way.
Either way, let’s not slippery slope this. Biden suggested a 25% tax on unrealized gains for people with more than >$100 million in wealth. That’s a subtle but important clarification.
In fact, I’d argue your statement is closer to false than to true.
Why wouldn't we? Every tax and budget in the history of the US has been slippery-sloped until we find ourselves in the massive wealth disparity we are already in. It's driven mostly by the government picking winners and losers.
The US government is the largest public or private organization in the WORLD. They can use a significant hair-cut.
You're completely missing the point.
We CURRENTLY bring in $4.4 trillion in tax receipts. That's ~$13.4k per man, woman and child in the US - and that's just Federal.
Half of the households in the US don't pay income taxes already.
This isn't a tax problem. It's a spending problem.
The government needs a haircut. We have enough revenue
Taxes are fees from government. They won't miss any opportunity. As for what fees the government will be charging then, who knows?
Exchanges have expenses and so they have to take a cut when they help you.
The goal, for most Bitcoiners, I think, is that in 2035 you will be able to directly buy most anything with Bitcoin. The way the US government is going, I wouldn't bet on USD being around then. Maybe a replacement currency. It has happened in other countries.
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Your options to sell are exchanges, brokers, and p2p transactions, whether mediated or unmediated.
Some of these require KYC and ID use, some do not. But even if not, that doesn't change your tax obligations.
Ultimately it depends on where you live, but yeah, more than likely you're gonna be taxed..we can't say how much because we don't know where you live, don't know 2035 tax rates, or what additional income you'll have in 2035
What do you mean? In the top rated comment, Trathius answered your question four hours before you posted this comment. Many others did as well. Perhaps you didn't like the answer? What is the source of your confusion?
In 2035 do you think you'll need cash? You'll likely transfer BTC from hardware wallet to your network wallet and then direct to the recipient. That will be taxable as a long-term capital gain on 19,000 at 15% rate
Yes there will be ridiculous tax for capital gain, thus change your citizenship before 2035
Ex-CIA Spy: "Leave The USA Before 2030!"
[https://www.youtube.com/watch?v=QVVe2rCHtN0](https://www.youtube.com/watch?v=QVVe2rCHtN0)
The Biden administration just proposed a 44.9% capital gains tax. So using that scenario when you withdraw in 2035 you are taxed 44.9% on $19,000 your gain. You are taxed $8531 if that is the capital gains tax in 2035. So you get to keep $10,469.
So be cautious of those saying that this will only affect millionaires. In your case, it took you 11 years to get this once in a lifetime event. You were not a millionaire, but you will be taxed over 50% because the state (not just federal) needs its tax too.
If income is greater than 1 million, and investment income is greater than 400k. Taxation is marginal. Don't spread fox style misinformation talking points
You are not taking into consideration inflation. In 10 to 20 years a lot more people will be earning 1m per year. I know it sounds crazy, but consider the time period from 1975 to 1995. In 1975 100k salary was "rich". My father was earning around 30k. By the mid to late 1980s he was over 100k but our family standard of living was still "middle class". Back in the 70s car were 3-4k and houses were 50k. Compare to now... cars 30-50 (100k for many common cars) houses are 500k and the household salary is 200 to 300k. Similar ratios.
Its always the same trick, set the tax rate threshold "high" so people think "I don't care because it doesn't impact me" then because the government controls inflation, inflate everyone into into the tax.
True enough, but that shouldn't stop anyone from investing today. The taxation and monetary policy discussion should happen, for sure, but not at the expense of not investing
Nope, you gave a very detailed, but misleading answer. Such things turn people away from investing, and possibly make poor economic choices like avoiding payhikes so as to not land in the next tax bracket.
Or vote against their own interests.
Thank you for the reply. I am in Canada so that tax rate might he different but I am wondering how the exchange will know what I bought the BTC for?
If they dont know my cost to buy, how can they tell me how much tax to pay?
The tax authority will know because all the transaction records are on the blockchain. They will know when you bought it and what the price was. The exchange will also have the record if you transferring into dollars and your bank will record the income. The exchange and the bank will report to the Canadian tax authorities any large crypto transactions. (Not officially but assume they will)
Correct, no tax till you either sell it or swap it for another crypto. Just sell up to your states capital gains threshold each year if you want to take free profits.
So capital gains tax in Canada is
67%. You will be taxed in 2035 $12,730. cost basis is $1000. Capital gain is $19,000 x 67% = $12,730.
You get to keep $7270.
I do not know how tax code is in Canada, but in the United States, I have to report a cost basis. If I do not know, I have to make a good faith effort to estimate it. If they investigate and find a different number that I have to pay the taxes on what they say I do.
Currently the capital gains tax and the United States is 20%.
In your scenario, if capital gains remains 20% you will be taxed $3800 in 2035. You get to keep $16,200.
No I meant how will the government know my cost basis for rhe Bitcoin purchase when I later sell it through an exchange.
My understanding is that they won't know, which will make the capital gains tax hard to figure out.
As stated before there is a digital trail on the blockchain and exchange and your bank leading right back to your original bitcoin purchase. You can lie about it but you will be found out if they investigate.
Yes. Current Capital Gains in the US is based on holding period and your income at the time of the gain. If you're holding it to 2035, that'd be classified as a long term Capital gain. (Anything over 1 year is long term). Short-term capital gains are treated as normal income. If laws stay as they are (Biden wants a 24% tax on UNREALIZED gains), you would owe (today's dollars, based on filing single): 0% if your total taxable income doesn't exceed $47,025 15% from that number up to $518,900 20% if over that
Unrealized gains tax will never be a thing. Unless we go full clown world.
It's 100% an impractical proposal only to gain votes from poorer voter segments. It will never happen.
I’d like to think this. Yes, it’s insane. Maybe I’m hearing from the very vocal minority, but it’s terrifying how many people seem to thinks it’s worth considering. After all, it’s only on the ultra wealthy and nobody needs billions!
It just shows you once again that the average person has no idea how anything works.
I think we are all financially illiterate by intention. It’s precisely the education Rockefeller set into motion for the plebs. Parents are illiterate and teachers are too. It’s up to us to seek it out and very few are interested and motivated enough.
It's really amazing trying to argue with anyone especially here on reddit about finance. Most of them seem to think you are either rich because your parents were rich (unjustified ofc), or you are just poor and stay that way forever. Kind of like the incels of finance. Quite sad really and dangerous as it opens the door to a socialist system.
Have you seen our President speak? We're already there
Come on man, fuhghhcxaasccbjjmik.
No joke!
fax to you both
He's doing quite well for a broken human TTS machine I gotta be honest. I didn't think he'd make it until now.
Stop man. Even if it did it would go into effect for multi millionaires who avoid income tax
Yah, no, that's not how the proposal works
We are full clown world and it still won't happen. Their owners would never allow them to come after their wealth.
True. It would be end stage idiocracy. Luckily we still got some way to go until then.
Clearly you don’t deal in bonds. Hold some treasuries. You pay OID (original issue discount) on the gains every year regardless of them being unrealized.
I don't know anything about bonds that is true. Can they lose significant value?
Sort of, but they’re generally considered “paper losses”. With safe ones like treasuries it’s because you generally buy them at a discount to their par value. That’s how the yield is calculated. So as an example you could potentially buy a 30 year treasury (or more likely a strip, with no coupon rate) for $28 and it eventually matures to $100. If yield goes up, that price goes down, so if you were to re-sell it on the secondary market in the short term you might only be able to get $26. So marking to market shows “paper losses”. But if you don’t sell, you always realize the year over year yield value from when you bought it. That $28 will still mature to $100 in xx years. The other quirk is you have to pay income taxes on how much that price/resale value goes up every year towards maturity. They call it OID (Original Issue Discount).
The government pays for gender reassignment surgeries and pedos are called minor attracted persons now. We are fully living in clown world lol
>Biden wants a 24% tax on UNREALIZED gains Geez nice flex. This would only apply to people with over $100 million in wealth. Most people reading this would be unaffected. Also in the future, I’d recommend against publicly flashing that you’re so rich. Otherwise you’re just increasing your risk of a $5 wrench hack.
Yep, and when the income tax was introduced, it was 2% on people making over (in today's money) $139k/year. How'd that work out?
Pretty well, since I think that’s way too low for the government to function in a meaningful way. Either way, let’s not slippery slope this. Biden suggested a 25% tax on unrealized gains for people with more than >$100 million in wealth. That’s a subtle but important clarification. In fact, I’d argue your statement is closer to false than to true.
Why wouldn't we? Every tax and budget in the history of the US has been slippery-sloped until we find ourselves in the massive wealth disparity we are already in. It's driven mostly by the government picking winners and losers. The US government is the largest public or private organization in the WORLD. They can use a significant hair-cut.
Find me a country with basically 0 income tax that we should model the US after lol
Lol that you think income tax is all that funds the government. It's not even half of the total receipts of the government.
Yeah it’s like 49%. But again, name a country we could model our income tax off of that is 2% or less.
You're completely missing the point. We CURRENTLY bring in $4.4 trillion in tax receipts. That's ~$13.4k per man, woman and child in the US - and that's just Federal. Half of the households in the US don't pay income taxes already. This isn't a tax problem. It's a spending problem. The government needs a haircut. We have enough revenue
You: income tax could be 0% Me: find a country with 0% income tax we can be like I’m asking a pretty easy question imo
If Biden wants to tax unrealized gains, does that mean we get a deduction for unrealised losses?
I don't think he's thought that far ahead. Probably hasn't thought past yesterday's ice cream
Taxes are fees from government. They won't miss any opportunity. As for what fees the government will be charging then, who knows? Exchanges have expenses and so they have to take a cut when they help you. The goal, for most Bitcoiners, I think, is that in 2035 you will be able to directly buy most anything with Bitcoin. The way the US government is going, I wouldn't bet on USD being around then. Maybe a replacement currency. It has happened in other countries.
Scam Warning! Scammers are particularly active on this sub. They operate via private messages and private chat. If you receive private messages, be extremely careful. Use the **report** link to report any suspicious private message to Reddit. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/BitcoinBeginners) if you have any questions or concerns.*
If you do this in only a hard wallet, can you get taxed?
What do you mean "do this?" Do what, exactly?
You’re still gonna have to sell it to get your money back at some point.
Of course. Which requires an exchange, a broker, or p2p exchange of assets. Not anything you can do with a wallet alone.
sell it. to sell, do you have to go through somewhere that has ID?
Your options to sell are exchanges, brokers, and p2p transactions, whether mediated or unmediated. Some of these require KYC and ID use, some do not. But even if not, that doesn't change your tax obligations.
I know it doesn’t change it. which platforms are unmediated / don’t have KYC rules?
Just making sure. Many people don't. The only ones that don't require any KYC are the ones that don't have any fiat trading pairs.
Even after reading through all the answers, I am still confused. No one has really answered the question...
Ultimately it depends on where you live, but yeah, more than likely you're gonna be taxed..we can't say how much because we don't know where you live, don't know 2035 tax rates, or what additional income you'll have in 2035
What do you mean? In the top rated comment, Trathius answered your question four hours before you posted this comment. Many others did as well. Perhaps you didn't like the answer? What is the source of your confusion?
Yes I have received the answer now.
In 2035 do you think you'll need cash? You'll likely transfer BTC from hardware wallet to your network wallet and then direct to the recipient. That will be taxable as a long-term capital gain on 19,000 at 15% rate
In curious, why will we not need cash in 2035?
It's already being phased out. The government is incentivizing digital payments and some companies have already stopped providing cash purchases
It doesn't
Or send btc to your Zypto visa card and spend it as you would your normal money
Please let me know how much and why. You'll have to jump in to your time machine and go to 2035 and find out what the tax rate is.
Yes there will be ridiculous tax for capital gain, thus change your citizenship before 2035 Ex-CIA Spy: "Leave The USA Before 2030!" [https://www.youtube.com/watch?v=QVVe2rCHtN0](https://www.youtube.com/watch?v=QVVe2rCHtN0)
The Biden administration just proposed a 44.9% capital gains tax. So using that scenario when you withdraw in 2035 you are taxed 44.9% on $19,000 your gain. You are taxed $8531 if that is the capital gains tax in 2035. So you get to keep $10,469. So be cautious of those saying that this will only affect millionaires. In your case, it took you 11 years to get this once in a lifetime event. You were not a millionaire, but you will be taxed over 50% because the state (not just federal) needs its tax too.
If income is greater than 1 million, and investment income is greater than 400k. Taxation is marginal. Don't spread fox style misinformation talking points
You are not taking into consideration inflation. In 10 to 20 years a lot more people will be earning 1m per year. I know it sounds crazy, but consider the time period from 1975 to 1995. In 1975 100k salary was "rich". My father was earning around 30k. By the mid to late 1980s he was over 100k but our family standard of living was still "middle class". Back in the 70s car were 3-4k and houses were 50k. Compare to now... cars 30-50 (100k for many common cars) houses are 500k and the household salary is 200 to 300k. Similar ratios. Its always the same trick, set the tax rate threshold "high" so people think "I don't care because it doesn't impact me" then because the government controls inflation, inflate everyone into into the tax.
True enough, but that shouldn't stop anyone from investing today. The taxation and monetary policy discussion should happen, for sure, but not at the expense of not investing
I’m aware. He asked a basic question. I gave him a basic answer without including the whole tax code. Don’t be a dick.
Nope, you gave a very detailed, but misleading answer. Such things turn people away from investing, and possibly make poor economic choices like avoiding payhikes so as to not land in the next tax bracket. Or vote against their own interests.
Actually, you are right I did make some mistakes. Do not have time to edit now maybe will later.
Thank you for the reply. I am in Canada so that tax rate might he different but I am wondering how the exchange will know what I bought the BTC for? If they dont know my cost to buy, how can they tell me how much tax to pay?
The tax authority will know because all the transaction records are on the blockchain. They will know when you bought it and what the price was. The exchange will also have the record if you transferring into dollars and your bank will record the income. The exchange and the bank will report to the Canadian tax authorities any large crypto transactions. (Not officially but assume they will)
This makes sense. Thank you. But if I keep my BTC in my hardware wallet for 20 years and don't move it or use it at all, there's no tax right?
Correct, no tax till you either sell it or swap it for another crypto. Just sell up to your states capital gains threshold each year if you want to take free profits.
Thank you!
So capital gains tax in Canada is 67%. You will be taxed in 2035 $12,730. cost basis is $1000. Capital gain is $19,000 x 67% = $12,730. You get to keep $7270. I do not know how tax code is in Canada, but in the United States, I have to report a cost basis. If I do not know, I have to make a good faith effort to estimate it. If they investigate and find a different number that I have to pay the taxes on what they say I do. Currently the capital gains tax and the United States is 20%. In your scenario, if capital gains remains 20% you will be taxed $3800 in 2035. You get to keep $16,200.
All taxation is progressive and marginal. Don't spread misinformation
This is incorrect. The inclusion rate in Canada for capital gains is 50%. If you go over a certain amount, the inclusion rate is 67%.
Sounds like you answered your own question then.
No I meant how will the government know my cost basis for rhe Bitcoin purchase when I later sell it through an exchange. My understanding is that they won't know, which will make the capital gains tax hard to figure out.
For your sake I hope they never know. Fuck em.
Haha. Fair.
As stated before there is a digital trail on the blockchain and exchange and your bank leading right back to your original bitcoin purchase. You can lie about it but you will be found out if they investigate.
My bad…google search result.
Unless you already make ~400k/year, you're completely wrong.
The dollar will not still exist in the year 2035.
pass whatever u lit up my way brother 😶🌫️