Do I need to pay taxes if I withdraw the same amount as deposited by exchanging through multiple cryptocurrencies?
These days I am trying to understand what exactly someone needs to pay taxes when investing in crypto. I have a simple plan and need some advice on whether someone needs to pay taxes or not. So, here is the below scenario that my mind thought of when trying to invest in HBD and later on withdraw the same amount. Basically, if I buy a stablecoin like HBD through additional hops like first buying Hive and afterward exchanging it for HBD, when I withdraw in the reverse order, do I need to pay taxes if the same amount reaches my account?
For example:
- I deposit $1,000 on Binance
- I buy USDT cryptocurrency on Binance ($1 USD = $1 USDT).
- I exchange USDT to Hive on Binance (1 Hive = $0.35).
- I withdraw Hive from Binance to my wallet.
- I exchange Hive for HBD using the internal market.
- I deposit HBD into savings.
- After a few months I withdraw HBD and exchange it in the reverse order to Hive (at a price of $0.40, thus less HIVE in order to get back my initial investment), USDT and USD in the same amount of $1,000 while keeping the interest in my wallet.
Considering that I have deposited $1,000 and withdrawn back also $1,000 while leaving my crypto proceedings in my wallet, do I need to pay any taxes on it?
I am summoning some of the knowledgeable minds on the Hive blockchain that could have some answers to this question: @nealmcspadden, @khaleelkazi, @taskmaster4450, @scaredycatguide, @jongolson, @dalz. Of course, anyone knowledgeable about the subject is invited to respond and provide his/her comments. Much appreciated!
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In the UK, every time you exchange into a different crypto, that's a taxable event.
Check your own local rules though.
Yeah, that's what I am afraid of as it is quite hard to track that.
For example, how would you do that on Hive where you get a 3% APR from staking Hive Power which is added probably with each block transaction...?
Koinly etc seem to do a good job of tracking crypto transactions generally, but Hive is a whole different matter as I've yet to find a tracking platform (like Koinly) that includes Hive... Plus most of the Hive stats type reporting only goes back a couple of months.
It would be great to have some sort of site that could track all transactions and benchmark to $/£/Euros etc on Hive over whatever timeframe entered - it must all be out there on the blockchain...
It depends on your legal jurisdiction. You are not a USA citizen and for your special case, if you don't do crypto via a firm, you have the following:
10% tax if your profit is over 600 RON - you put 1000 in, pull 1000 out and leave the rest on the wallet, the rest will be taxed if you pull it out.
If your profit is over 30600 RON, you will add another 10% for social services.
If you face loses, in your other financial investments, like stocks, you can compensate the amount for the tax-free limit. This can be claimed over a period of 7 years.
Also, the profit is still vague described, but you need to consult the legislation.
I do it via a firm, where every transaction is tracked but can deduct most of the profit with development of the firm.
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If it applies when I exchange to fiat is great, if it applies to every crypto exchange that I am doing it would be a mess as I don't know where to start.
Ask at a tax office.
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Im very lucky this laws havent arrive yet to my country yet, its like the oldest pirate country, I hope they dont touch crypto in a very very long time, in the future I plan to stay full crypto and find ways to pay in crypto via a card or something but would like to stay out of fiat if possible
It's always something that I've been wondering but I don't really care😂 screw the taxes! My country is down in the dumps anyways😂😂
It's confusing but I think you only have to report your profits. I guess it really depends because the laws aren't very clear and it differs from place to place.
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You are right on that... but what does it mean for profits?
We all might exchange one crypto asset for the other and if you need to track it all down as a taxable event than I think it is very hard to do so.
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It's hard and I doubt many crypto companies will make a tax sheet for you. So I don't even think they can track everything at all. It's up to the person reporting in to make sure it's right but even that is tough.
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Just don't focus on this bull shit, the government is taking taxes on everything we use. Your worries should be on collecting more hive, how many collect more hive ;)