For the last several years, many have enjoyed the rewards of investing in various forms of cryptocurrency under the assumption they could avoid the prying eyes of the government.
Some bragged about being able to conduct business and earn capital gains free of the worry of taxation.
Those days are over…
Last week I was listening to an episode of Rich Dad Radio titled “The IRS Versus Bitcoin” where I stumbled upon some shocking news reported by CPA Tom Wheelwright, a Rich Dad advisor.
Tom warned listeners by saying that anytime you use or trade cryptocurrency, it becomes a taxable event! He went on to say that if in 2020 you did ANYTHING besides buying cryptocurrency you must declare it to the IRS when filing your taxes, if you don’t, it’s a FELONY.
It seems that any transaction except buying bitcoin is subject to a tax beginning at a rate of15% for both the user of the bitcoin and the receiver. There is also capital gains tax that will apply to many transactions.
So much for bitcoin being unregulated!
We will have to wait to see if the IRS can gain any traction in regard to enforcement…but that never really stopped them in the past.
That got me thinking…in today’s brave new world it seems our elected leaders have the ability and the gall to pass just about any legislation they are paid to make into law. These policies and laws are often created without much thought to how they will impact everyone they represent.
It’s been said many times that if you simply pay attention to what the government wants you to invest in, you can enjoy a relatively tax-free or at least tax favored lifestyle. Those that complain about how things are an attempt to circumvent the system are often found out and severely punished.
Before your mind goes down a political rabbit hole, you must understand that the IRS does it’s thing regardless of who is in office, yes, the IRS’ activities are influenced by the White House, Congress, and Senate but that doesn’t change the fact that in a basic sense, taxation, for the most part, can be avoided.
Here is a stackable nugget of what I have learned thus far which has helped me legally reduce my tax obligation year over year, while never having to sacrifice my lifestyle to accomplish it.
The Government does not like you flipping anything, houses, apartments, businesses, whatever…they want you to earn in streams of income, not piles.
The Government wants you to provide housing, not buy and flip it and by doing so decrease affordability.
The Government these days wants you to invest in renewable energy sources, soon, expect the tax benefits of investing in oil and gas to be reduced or 67disappear.
When you generate piles, they are easy to see and discover, yet nobody is looking for streams to steal.
Many say that taxation in and of itself is a crime. So if you were a criminal looking to steal money, wouldn’t you gravitate towards looking for the easy to see and easy get piles to steal from? Of course, you would.
I’m not suggesting you hide income from the government, they will find it eventually so why hide it, instead, structure your affairs such that you mostly earn streams, and can turn piles into streams.