In a major blow to the privacy and anonymity of cryptocurrency users, the Internal Revenue Service (IRS) has obtained a court order to force Kraken, one of the largest and oldest Bitcoin exchanges in the world, to disclose its customers’ personal information. hand over .
Kraken is one of the largest and most popular crypto exchanges in the US. It allows users to trade over 50 different cryptocurrencies and offers advanced features such as margin trading, futures, and staking. To report your crypto transactions on Kraken, you need to download your transaction history from the platform and calculate your profits and losses for each transaction.
You can use third-party software or services to help you with this process, or you can do it manually using a spreadsheet. Once you calculate your gains and losses, you must report them on Form 8949 and Schedule D of your tax return. You should also check if you have foreign account reporting obligations such as FinCEN Form 114 or Form 8938, depending on the value of your crypto holdings on Kraken.
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The Internal Revenue Service (IRS) has subpoenaed Kraken to provide information about its users who transacted $20,000 or more between 2016 and 2020. The IRS attempts to identify and tax individuals who have not reported their cryptocurrency income. trade. Kraken has not yet responded to the subpoena, but is expected to comply with the law and protect the privacy of its customers as much as possible.
The IRS treats cryptocurrencies as property, not currency. This means that every time you buy, sell or trade crypto, you trigger a taxable event and must report the capital gain or capital loss on your tax return. The amount of tax you owe depends on your income bracket and the holding period of the crypto. Holding the cryptocurrency for more than a year is considered a long-term capital gain and is taxed at a lower rate than short-term capital gains, which apply to crypto held for less than a year.
Cryptocurrency can be complex and confusing, especially if you trade a lot or trade on multiple platforms. Here are some tips to help you stay compliant and avoid fines from the IRS:
Keep track of your transactions and records all year round. Don’t wait until the last minute to collect your data and calculate your taxes.
Use reliable and secure software or service to help you with your crypto tax return. Make sure it supports Kraken and other platforms you use, and that it can handle different types of trades such as margin trading, staking or airdrops.
Carefully review your transactions and reports before submitting. Please make sure they are accurate, complete and match the information on your Kraken account.
File your tax return on time and pay any tax due. The deadline for filing your 2023 tax return is April 15, 2024, unless you request an extension. If you owe taxes, you can pay online or by mail using several payment options offered by the IRS.
The subpoena requires Kraken to provide the IRS with the name, address, phone number, email address, taxpayer identification number, account statements and transaction history of its users who meet the criteria. The IRS claims this information is necessary to identify and correct the under-reporting of income and payment of taxes from cryptocurrency transactions, which are estimated to run into the billions of dollars.
However, many cryptocurrency advocates and pundits have criticized the IRS’s move as an invasion of privacy and a violation of the Fourth Amendment, which protects against unreasonable searches and seizures.
They argue that the IRS is casting a net too wide and requesting more information than is necessary to enforce tax compliance. They also point out that cryptocurrency users have legitimate reasons to value their privacy and anonymity, such as avoiding censorship, discrimination or prosecution.
Kraken has not yet commented on the court order or whether it will comply or challenge it. In the past, however, Kraken has spoken out about its commitment to protecting the rights and interests of its users.
In 2016, Kraken refused to comply with a similar request from the New York Attorney General’s office, which sought information about its activities and clients as part of an investigation into cryptocurrency exchanges. Kraken CEO Jesse Powell said at the time that the request was “offensive” and “unconstitutional.”
It remains to be seen how this legal battle will unfold and what implications it will have for the future of cryptocurrency and its users. For now, many Kraken customers are likely to feel fearful and betrayed by the IRS’s attempt to access their personal information.