Biden administration predicts $10 billion in gains from cryptocurrency taxation

Last year, the Internal Revenue Service (IRS) requested additional authority to track crypto transactions. This implies that every US resident who dealt with cryptocurrencies during the fiscal year 2021 must now file a tax return with the IRS.

The US cryptocurrency policy

Cryptocurrency is a profitable financial alternative for accumulating, keeping, and increasing the portfolio. Even though many large corporations use them as an alternate way of payment and trade, most countries have never officially compared crypto assets with fiat money. In the United States, cryptocurrencies, including NFTs, are considered property for tax reasons. Gains from digital assets, including stock gains, are generally subject to capital gains tax. In other words, earned cryptocurrencies, on the other hand, are considered income and are subject to income tax.

On March 30, 2022, US President Joe Biden announced his budget proposal for the fiscal year 2023, as well as a taxation explanation from the Treasury Department. The president’s administration predicts that additional rules might generate around $11 billion in tax income as budget money over ten years. Simultaneously, roughly $5 billion is planned for next year alone. This will result from so-called modernizing the regulations to apply specific financial accounting and reporting methodologies to digital assets. This article will tell you more about what’s going on.

$6.6 billion in tax revenue

The US administration estimates that adopting so-called mark-to-market regulations to trade cryptocurrencies will generate $6.6 billion in tax revenue between 2023 and 2032. Mark-to-market, according to Decrypt’s sources, is a method of valuing assets based on current market conditions. That is, such legislation considers more than just the asset’s acquisition price, which may be greater or lower than its fair market value.

In other words, the United States will establish a method to tax unrealized profits. It works in the following way. The worth of your crypto portfolio increases due to the rise in the price of the particular asset. Then, due to the new taxation policy, even if you don’t sell the coins by the end of the year, you’ll still have to pay taxes on them.

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Valentyna Bereza, Team bit4you.