Crypto Transactions Under $50 Would Exempt From Taxes?
Crypto Transactions Under $50 Would Exempt From Taxes
A bill that would exclude cryptocurrency users from reporting any transactions up to $50 or any transaction in which they gain less than $50 has been proposed by prominent U.S. senators.
In an effort to support the exemption from tax requirements for cryptocurrency users making modest investments or purchases, Senator Patrick Toomey joined with Kyrsten Sinema. Their Virtual Currency Tax Fairness Act is a continuation of an initiative that was previously put out in the House of Representatives. The idea of exempting low-level transactions from tax concerns has also been mentioned in other areas, such as in a more comprehensive measure that senators Cynthia Lummis and Kirsten Gillibrand submitted this year.
“While digital currencies have the potential to become an ordinary part of Americans’ everyday lives, our current tax code stands in the way,” said Toomey.
New legislation will allow anyone to “use cryptocurrencies more easily as an everyday method of payment by exempting from taxes small personal transactions like buying a cup of coffee.”
“When you sell virtual currency, you must recognize any capital gain or loss on the sale,” the IRS declares on its website.
According to industry advocates, the requirement has been one of the obstacles preventing the use of cryptocurrency as a replacement form of payment in the United States.
“This would foster use of crypto for retail payments, subscription services, and micro transactions. More importantly, it would foster the development of decentralized blockchain infrastructure generally because networks depend on small transaction fees that today saddle users with compliance friction,” said Jerry Brito, executive director of Coin Center, a crypto policy think tank in Washington.
The new legislation will, however, have a difficult time getting through Congress, which is about to begin a lengthy August break before the midterm elections. Although there has been limited progress in efforts to regulate stablecoins, most congressional insiders believe that meaningful legislation development on cryptocurrency won’t likely occur until the following year.
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