New Rules for Reporting Crypto Taxes by OECD: The Organization for Economic Cooperation and Development, earlier this year published a public consultation paper outlining a new structure for reporting crypto taxes that would revolutionize how international tax agencies exchange data on cryptocurrency.
In this blog, we’ll try to understand the new rules laid down by the OECD and what its main objective is. Additionally, we will also cover how reporting crypto taxes with TurboTax is made easy with crypto tax reporting software like ZenLedger.
Cryptocurrency Reporting Framework
The global tax reporting system is being updated to include new suggestions for cryptocurrency.
Earlier this year, a consultation paper for its new crypto tax reporting system was released by the Organization for Economic Cooperation and Development, asking for feedback from international policymakers. Under the new due diligence processes outlined in the proposed rules, people and organizations who offer cryptocurrency custody and exchange services as a business would have to “identify their consumers” and report the aggregate values of the trades and transactions for such customers on a yearly basis.
Why Did the OECD Take Such an Initiative?
The OECD is a 38-nation intergovernmental economic organization that was founded to promote global collaboration on shared issues. At the G20’s request, the group created the Crypto-Asset Reporting Framework because some of its participants were concerned that cryptocurrencies would be exploited to undermine current international tax transparency measures, such as the Common Reporting Standard.
Aim of the Rules for Reporting Crypto Taxes
- Disclosing Transactions
With the help of the framework, information about transactions involving cryptocurrencies will be automatically sent between international tax authorities and crypto service providers. The proposed regulations would require crypto service providers to gather substantial customer-identifying data and disclose tax records to the tax administration of each of the residence jurisdictions of their customers.
- Monitoring Wallets
In addition to disclosing crypto-to-crypto and crypto-to-fiat transactions, the OECD has recommended that crypto providers report on transfers of crypto assets, which would enable tax authorities to locate and monitor crypto users’ unhosted wallets.
Other intermediaries offering exchange services, such as brokers, dealers, and owners of crypto ATMs, are included in the OECD’s definition of “crypto-asset service providers” in addition to centralized cryptocurrency exchanges.
- Combating Tax Evasion
Last but not least, the OECD has proposed changes to the Common Reporting Standard — a standard for the fully automated exchange of information between global tax administrations to combat tax evasion — in order to include digital currencies issued by central banks and other interpretations of fiat currency under the standard.
Reporting Crypto Taxes with TurboTax
Users of TurboTax may submit their bitcoin tax returns immediately via the TurboTax app. The TurboTax team has teamed with other cryptocurrency tax reporting tools, including ZenLedger, to make reporting crypto taxes TurboTax possible.
- Register into ZenLedger first before using TurboTax Online and importing your form 8949.
- You may obtain your TurboTax files after you have produced your reports.
- To get a zip file, simply click “Download TurboTax files.”
Note: For reporting crypto taxes with TurboTax Online, use .csv file, and for reporting TurboTax Desktop, use .txf file.
The OECD has requested feedback on the recently proposed crypto tax disclosure requirements from all relevant parties by the end of April before completing the regulations in light of the comments and informing the G20 in October.
- Can you use TurboTax for cryptocurrency?
The most expensive choice for filing taxes online is TurboTax, but it provides a top-notch user interface and access to professionals. For self-employed filers who utilize QuickBooks integration, it’s extremely useful.
- Do you have to report every crypto transaction on taxes?
Your cryptocurrency holdings, such as Bitcoin, Ethereum, and others, are subject to taxes. The tax treatment of your virtual money will be the same as that of any other assets you may possess, like equities, bonds, or gold because the IRS considers cryptocurrency holdings to be “property” for tax reasons.
- Do you have to report crypto under $600?
Any payments made to you by an exchange, such as Coinbase, that total $600 or more must be reported to the IRS as “other income” on IRS Form 1099-MISC, a record of which you will receive for your taxable income.