What to Do With Your Crypto 1099?

Crypto 1099

For those trading in cryptocurrencies, crypto trading platforms are required to provide you with a form 1099 for use on your taxes. When doing so, the IRS is also notified of the information contained on the tax form. And although you will receive either a form 1099-K or a 1099-B, it is not always clear what the information is saying. For example, a Form 1099-K will provide you with a list of cryptocurrency transactions and sales, but it will not tell you what your tax liability for those transactions is. Form 1099-B does provide more information, including your cost-basis, but many companies have not yet transitioned to the more descriptive form, and instead rely on the old 1099-K, which for many purposes is useless without a working knowledge of capital gains. You can find more information on the differences between Forms 1099-K and 1099-B, here.

So what exactly do you do once you’ve received one of these crypto 1099 forms?

What is a Cost Basis?

The term basis, as used in the Internal Revenue Code, refers to a person’s initial investment in a piece of property. For example, if you purchase something for $10, then your cost basis is $10. If you then sell it for $12, your cost basis is still $10, but your gain on the sale is $2. You are required to report and pay tax on the $2 gain, but not on the original $10 that you spent on the item. This holds true with your cryptocurrency holdings, though it can become much more complex as you likely hold more than $10 in crypto, and your holdings are likely diversified among different types of cryptocurrencies, which decrease and increase in value regularly.

The relevant governing statute for determining one’s basis, as well as gains or losses, can be found in IRC §1012. For the purposes of your cryptocurrency tax liability, you will likely not need to delve into the complexities of the Internal Revenue Code, which, unsurprisingly, is not very helpful to anyone who is not a tax attorney. You can find more information on how to determine your cost basis, here.

What Do I Do With My 1099?

As stated above, a crypto 1099 often comes in one of two forms: 1099-K or 1099-B, and understanding the information on those forms can save a lot of tax-related anxiety. Many cryptocurrency investors panic on receipt of a 1099-K form, as it only shows a list of crypto transactions and not a person’s actual tax liability. In order to determine your tax liability, we will need to refer back to the term “cost basis.” You can find more information on how to determine what is known as an adjusted basis, here.

It is always good practice to keep track of the initial purchase price of any cryptocurrency transaction you make. By doing this, you can keep track of your basis in the specific cryptocurrency holding. If you have not been keeping track, it is likely that your cryptocurrency management platform has.

In order to calculate how much you owe in taxes, all you need to do is look at the transactions listed on your Form 1099-K and subtract them from your initial cost basis of each transaction. The difference between the sale price and your cost basis is the amount realized, or what the IRS will consider your “gain.” You only need to pay taxes on realized gains, meaning if you currently hold cryptocurrency that you have not sold, you do not need to pay taxes on it until you sell it. This becomes increasingly difficult when making a lot of transactions, as each sale results in the need for a computation on gain, even if reinvested in a different cryptocurrency. This is why the Form 1099-K is helpful, as it lists all of the transactions.

For those with high volumes of transactions, it can be helpful to hire a tax attorney or CPA to help you file your taxes to ensure that you do it correctly, especially when determining the correct short-term or long-term capital gains tax, which operates differently than regular income tax.

Conclusion

Now that you have a basic understanding of what a cost basis is and what your crypto 1099 means, you can make your cryptocurrency trades with confidence, knowing that when you receive a Form 1099-K, you likely aren’t liable to pay taxes on the full amounts listed thereon, rather, you only need to pay taxes on your realized gains. And if you receive a Form 1099-B instead, your basis and gain should be clearly listed, for a much easier assessment of your tax liability.

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How to Protect Your Bitcoin Wallet

Bitcoin wallet

Bitcoin is a hot commodity lately. This cryptocurrency is usually at the top of experts’ and users’ lists of recommendations for investments in the digital world. If you’re thinking about using Bitcoin or have already started your crypto journey, there are steps you can take to secure your currency. Here’s how to protect your Bitcoin wallet.

1. Use a Hardware Wallet

There are a few types of cryptocurrency wallets. Hard wallets connect to the internet for you to access at any time. This constant internet connectivity comes with certain cyber risks, though. If you want more protection, use a hardware wallet.

Hardware wallets are “cold,” meaning they do not connect to the internet, but you can still receive funds at any time. The disconnect makes it harder for cybercriminals to hack or breach your Bitcoin. Trezor and Ledger offer various hardware wallets that store your currency in an external, USB-like device.

2. Keep Your Private Key Offline

When you use a hardware wallet, it doesn’t actually store all your cryptocurrency. Instead, it stores a private key. This private key corresponds to a public key that includes certain amounts of Bitcoins, giving you the correct balance.

You must keep this private key secure. You can keep it offline by writing it down on a piece of paper and storing it in an emergency disaster kit that only you have access to. The more secure and offline it is, the less you have to worry about it.

3. Encrypt Your Wallet

Encrypting your wallet is a helpful step to take. You can start simple with two-factor authentication and go from there. Any form of encryption will help. Two-factor authentication helps with verifying your identity in two ways so that cybercriminals have a harder time breaching your wallet. You can also include encryption software if you want extra protection for your Bitcoin.

4. Keep Your Currency in Multiple Places

Don’t put all your eggs in one basket. The phrase rings true for cryptocurrency. If you have all your digital currency in one wallet, you have a higher chance of losing more. If you place your funds in different wallets, though, you have a better chance of protecting your assets. When saving, especially, you’ll want to keep your Bitcoin safe however you can.

5. Enact Smaller Transactions

If you’re a big Bitcoin spender, you might want to step back. High-value transactions and trades can draw attention from cybercriminals. If they see that you have assets to spend, they may be more likely to target your funds. Of course, you should spend your cryptocurrency however you’d like. Just keep in mind that you’ll need more protection.

>> Bitcoin Halving: How the Miners are Faring So Far

6. Use a Secure Internet Connection

Using the right internet connection is an easy way to protect your Bitcoin wallet. Of course, your home internet connection is likely a safe option since it’s secure and isolated. However, you should keep in mind that public internet connections can be risky.

Public Wi-Fi isn’t always secure, and since many people use it, cybercriminals may have an easier time accessing your wallet. When on public Wi-Fi, it’s best to not have an active wallet. If you do make transactions, strongly consider using a reputable, logless, paid VPN service.

7. Keep Your Finances a Secret

Be cautious about who you share your Bitcoin status and private key with. You’ll likely only want to keep those numbers to yourself unless you have a partner you’re willing to share them with. Otherwise, the fewer people who know, the better. Think of cryptocurrency as a real bank account. You don’t want people knowing your PIN number or account status—and your private key is the same.

8. Use Antivirus Software

Viruses are a digital plague in their own way. Cybercriminals use them to steal information and finances from vulnerable accounts. Antivirus software can help, though. Since cyberattacks are frequent and often come in the form of viruses and malware, you’ll want protection. With the most up-to-date features, antivirus software can do just that.

9. Watch Out for Phishing

Like viruses and malware, phishing is another form of cyber scamming. Certain criminals use emails and links to scam users into giving up private information about their wallets. Sometimes, phishing scams can link to viruses and malware, too. Watch out for suspicious content—it’s better to be safe than sorry.

10. Double-Check the Recipient

As you carry out your transactions, make sure you’re sending your Bitcoin to the right person. Scammers may try to skew transactions or trick you into giving your money elsewhere. You can get software or programs to help detect errors, as well. Be sure to vet your transactions and partners thoroughly before any money changes “hands.” Sometimes, it can be hard to recover your Bitcoin currency.

11. Back Up Your Wallet

Last but certainly not least, you’ll want to back up your wallet. A backup never hurts and always comes in handy if you need it. There are different ways to back up your wallet, so choose the one that works best for you. Then, you have what you need to fully protect your Bitcoin wallet if something goes wrong.

A Safe Crypto World

As cryptocurrency grows in popularity, you can expect some changes to come about. Keep an eye on the security trends and follow the best practices as they emerge. Staying ahead of the curve will bring you the best Bitcoin protection to stay safe in the cyber world.

This article was curated through CryptoCurrencyNews’ Contributor Program. If you would like to write for us, send us your submission!

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Will the USD Hold Up as the Global Reserve Currency?

USD

The USD is a global reserve currency. Therefore, while many currencies weaken during times of crisis, the US Dollar not only stays put but grows stronger. This has been happening over and over, so it’s expected that in the coronavirus recession, USD should behave the same way. And it does stand strong at the moment. However, the long-term forecast for this currency isn’t so bright. It’s quite possible that with the rise of digital payments in the pandemic, a crypto reserve currency is in our future.

Is the USD Truly Weakening in the Coronavirus Crisis?

At the moment, the USD is the strongest currency in the world. It’s a simple truth. And this situation won’t change for some time yet, regardless of how the US economy is faring. The reason for this is the fact that the US Dollar is the reserve currency of the world. Therefore, when the volatility of a global recession hit, everyone flocked to the Dollar.

Investors, business owners, and regular everyday people are putting their trust and money into the USD. They are doing it in order to hedge against the difficult economic times ahead. This strategy has worked for many during previous recessions, so why would this one be different?

So far, there is nothing different about the coronavirus recession in regards to the USD situation as a dominating currency. Also, everyone who can, such as expats and global businesses, are capitalizing on it. You can see this from the growing demand in USD transfers. Everyone wants to have some security in these uncertain times, and it seems that the Dollar is it.

All things considered, it should be a stellar time for the American Dollar, right?

Unfortunately, the current crisis is very different from a regular economic recession. It’s not only the coronavirus pandemic that’s affecting the current situation. The US economy is facing pressure from multiple sides and, therefore, the USD is in danger of weakening and collapsing along with it.

For now, its status as the global reserve currency is preventing this from happening. However, this “protection” won’t last forever. And should the USA not recover well from this pandemic, the Dollar might lose its position entirely.

Will the USD Lose Its Position as the Global Reserve Currency?

For all its seeming strength, the USD is in a difficult position at the moment. There is no doubt that it will remain strong for a while. However, once this crisis is over, the world will be changed irrevocably. And one of those changes might be the fall of the US Dollar from the position of global reserve currency.

The main reasons for this possibility are:

  • The US economy is weakening fast.

Millions of people have already lost their jobs, and more might follow in the next few months. As such, the economy cannot recover the losses incurred during lockdowns. And the longer it takes to do this, the harder the situation gets.

  • Difficult trade relationships with China.

It’s a fact that China’s economy hasn’t been stronger than that of the USA prior to this crisis. It’s not stronger now, as well. But while China is rapidly recovering, the US is facing a threat of a second wave of the pandemic. Once that strikes, the economy will suffer much more. Meanwhile, China is gaining rapidly and could become the greatest global economy soon. Should this happen, the mantle of the world’s reserve currency might fall to the Yuan.

  •  The need for digital currencies is growing fast.

One factor that can help bring down the USD is that the world is about ready to embrace the use of cryptocurrency. This crisis has led to an unprecedented rise in the use of fintech apps. It jumped up by 72% in a single week at the start of the pandemic. And while digital payments have been growing more popular before, now they’ve become a necessity. It’s reasonable to assume that adopting crypto is the next logical step in the global monetary development.

Can the Next Reserve Currency Be a Cryptocurrency?

Crypto might not have made a breakthrough yet, but it’s been steadily growing in popularity in the last few years. The COVID-19 pandemic has advanced this growth by leaps and bounds. Many financial expert advisors recommend investing in cryptocurrency today.

If nothing else, this will be a good hedging tool for panicking investors.

It’s true that the Bitcoin value dropped dramatically at the beginning of March. This made many people doubt that crypto might become a true hedging tool. However, since then, BTC has already doubled in value. This recovery rate indicates that while Bitcoin isn’t 100% safe, it’s still rather recession-resistant.

Meanwhile, governments the world over are understanding that instead of a luxury, digital payments must become the norm. It’s a healthcare requirement, as well as a logical choice. The increase in the number of digital payments during the lockdown period is proof that people like this method. This means that when the social distancing regulations are lifted, people won’t just go back to using cash.

Should cash payments become obsolete, a digital currency will be a necessity. China’s government seems to understand this clearly. Therefore, the country is reported to be in the process of the development of digital yuan. There is no release date for it yet, but this type of crypto might be exactly what’s necessary.

Nothing changed about the fact that governments are against crypto because they can’t control it in any way. A digital currency that’s tied to the country itself would be a different case. However, now it’s too early to say what will come from this situation in the long-term. But one thing is sure, if there is no digital version of the USD in circulation when other such crypto variations begin to appear, the Dollar will have no chance.

Final Thoughts: What Will the Monetary World Be Like After the Pandemic?

The US Dollar is a very strong currency. There is no denying the fact that even if it does lose its position as a reserve currency, this won’t happen fast. However, the situation we are seeing today makes this future a distinct possibility.

The main problem is that despite the usual strengthening of the currency during a global recession, it’s still weak. Numbers might not reflect this at this moment. But major economic issues plaguing the US are concerning.

The tension in the US-China trade relationship doesn’t help America in any way. In fact, it’s setting the US economy, and therefore currency, in direct competition with China. Sadly, this is a fight that the US might not win. As Chinese businesses are reopening after the virus, America is set to face the second wave.

Should this happen, the US economy, which is already struggling, will be crippled. At that point, the benefits that come from the USD being a global reserve currency won’t be able to sustain it. Therefore, other currencies, such as the Yuan, might push to the top position as the reserve.

However, there is also a chance that this drastic monetary and economic situation will give cryptocurrency the push it needs. The benefits it offers as both a hedging tool and tool for quick global payments are numerous. And the need for easy digital payments is skyrocketing. Crypto has the potential to resolve many issues for many economies. The question is whether governments will take the step of truly adopting digital currencies.

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Bitcoin Halving: How the Miners are Faring So Far

Bitcoin halving

On May 11, 2020, Bitcoin successfully executed its third block reward halving. Bitcoin halving events usually occur every four years, and the first and the second events took place in 2012 and 2016, respectively. Since miners’ rewards for verifying blockchain transactions are usually trimmed by 50% following a halving event, past events have forced miners to adopt numerous changes to cater for the drops in profitability. What about the recent halving event? How have things unfolded for miners this time around?

Mining Inefficiencies

One obvious impact of a halving event is the reduced revenues miners receive. …

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Counos U Stable Coin Listed With Swiss ISIN No. and Backed 100%

Counos

Counos U: A New Means of Payment is Conquering the World

Being able to pay with one currency and get a return has never been seen before and will conquer the world in no time. Counos U is 100% backed with dollars and has a fixed value of $100. To ensure this, a specially developed vehicle is built. This vehicle secures the deposited dollars.

That is 4 trustees, a Swiss bank, and seven other lawyers. This ensures that every Counos U is 100% backed with US Dollar, not as with USDT, where only 74% is backed with dollars. But that’s not enough, for all Counos U that you hold longer than 1 year, you get a 3.9% return. You can buy Counos U directly with your primary bank via the Swiss ISIN.

Prominent Features of Counos U:

  • Direct purchase and sale through your local bank
  • Fixed value of $100
  • Annual return of 3.9%
  • Easy exchange to dollar, CHF, EUR, or other cryptocurrencies
  • Worldwide transfer
  • Grade A safety and security algorithms
  • Fast and quick

Cuonos

The First Bankable Stablecoin

The Counos platform was the first to create a coin that can be bought directly with your local bank. No matter which bank in the world, you can go to your advisor and buy Counos U through the Swiss ISIN. The latter will ask you for the ISIN, which you will find here, then he will send the money to a Swiss bank and they will secure your assets.

Easy Exchange from Dollar, CHF, EUR, to Counos U and Back

With the help of the Counos Decentralized Exchange of the Counos Platform and the agents, it is easy to exchange Counos U with Fiat currencies around the world and to exchange back again.

This way you can send money around the world 24/7 in a safe and fast way. The minimum transaction costs are also negligible and therefore unrivaled. The Blockchain only takes 2.5 minutes to confirm a transaction and since it is not a token but a coin, this will not be longer.

How Does Money Transfer With Counos U Work?

Transferring money with Counos U is as simple as it is ingenious. For example, we take a person who wants to deliver USD from the USA to Dubai. In this case, this person can buy Counos U from a Counos agent in the United States. He then sends these to Dubai, where an agent can convert the Counos U into USD. Since no bank has to give a confirmation, this works at any time.

Payment of Goods or Services

A very safe and easy way to use Counos U is to pay for goods or services. For example, if you live in the USA and order a Rolex from Switzerland, you can use Counos U on the Counos Escrow service to purchase and pay for the Rolex. The seller then sees the payment already made and can safely send the Rolex to the USA. He can then change the received Counos U to Swiss francs or US dollars or keep the Counos U and benefit from the 3.9% annual return.

Another Big Advantage of Counos U

Many traders or ordinary people want to keep their assets in safe currency overnight. So you can change your volatile cryptocurrencies into a stablecoin on every central exchange that Counos U offers and thus keep your assets safe. If you want withdrawals from the exchange, you can withdraw Counos U directly and do not have to refer to a bank account.

For technical and more information, visit Counos Platform.

Featured image: Counos

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