LibraTax liberates Bitcoin users from the hassles of taxation
Back in March, the Internal Revenue Service announced that Bitcoin and other altcoins would not be considered as currency for tax purposes, but treated as “property” instead.
The announcement didn’t sit well, especially with miners who must report the fair market value of the virtual currency as gross income on the date of receipt, not to mention how this taxation will affect users, cryptocurrency payments processors, retail shops that accept cryptocurrencies, and exchange markets.
Computing for your tax obligations in regular currency is hard enough, but those using Bitcoin now face an even more daunting task. To keep Bitcoiners from going insane, somebody’s come up with a tool to calculate your cryptocurrency taxes for you.
LibraTax is the first tax preparation tool for Bitcoin and altcoins. It helps todetermine how much tax you should be paying when using Bitcoin to buy things, donate, pay for services, or even as a gift – in case people want to declare their Bitcoin spending.
LibraTax works by automating the accounting process related to virtual currency spending. It does so by retrieving the user’s transaction history from the public blockchain and synching it with the digital currency’s historical fair market value. The service allows users to track virtually all taxable events without having to manually calculate each transaction.
“The recent guidance given by the IRS in March to treat digital currency as property requires that taxpayers report digital currency gains and losses on state and federal returns,” Libra said. “Taxpayers and tax professionals alike have been uncomfortable and encumbered with this manual calculation because it is extremely time-consuming and prohibitively difficult.”
One major appeal of Bitcoin is its anonymity – you don’t have to reveal your identity when buying things. Unfortunately, if you use LibraTax, you need to disclose your Bitcoin addresses so your transactions can be analyzed. However, Libra does offer the option to upload a spreadsheet of all your transactions with no public addresses or identifiable details.
LibraTax is free to use until its official launch in mid-September, when it plans to release a premium version that could cost between $10 to $19. It also plans to release a version of LibraTax that especially caters to tax professionals, CPAs, and accounting firms, on a subscription basis.
photo credit: fd via photopin cc
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