People's interest in investing in bitcoin is increasing as the price of the digital currency jumps. Director of Counseling, Services and Public Relations of the Directorate General of Taxes Hestu Yoga Saksama also emphasized that the profits from the sale and purchase or investment of bitcoin are taxable income.
"If there are profits in selling / buying or investing in bitcoin, it is taxable income (PPh). In accordance with the self assessment system, the taxpayer reports the income in the annual tax return and pays taxes, "
To properly pay taxes on an investment in bitcoin, you'll need to wrangle some information from each sale you conducted over the last fiscal year. This includes the basis for each amount of bitcoin you sold, the date you bought it, the date you sold it, and the price at which you sold it.
Short-term gains are taxed like regular income, so the rate is equal to your federal income tax bracket. Long-term gains are taxed at a lower rate, but still according to your income level.
The breakdown is as follows:
People in the 10% and 15% brackets pay 0%.
People in the 25%, 28%, 33%, and 35% brackets pay 15%.
People in the 39.6% bracket pay 20%.
Two hypothetical cases
Taking all that into account, consider a sample bitcoin investor who makes $75,000 a year.
Hypothetical case #1: short-term gain
The investor bought one bitcoin on January 2, when it cost $1,000. After it hit $2,000 later that May, she decided to sell, for a profit - or realized gain - of $1,000.
In this case, the basis was $1,000 and the realized gain was also $1,000 ($2,000 sale price minus the $1,000 basis). Since she held the investment for less than a year, it was a short-term gain, meaning the money would be taxed at her tax bracket of 25%, for a total tax bill of $250. All told, she'd keep $1,750 from the sale - $750 of which would be her after-tax profit.
Hypothetical case #2: long-term gain
Now let's assume she bought the bitcoin a year prior, on January 2, 2016, when the price was just $433. If she sold at the same time - when it hit $2,000 - she'd realize a gain of $1,567. Since she held it for more than a year, the gain would be taxed at 15%, for a total tax bill of $235.05. The sale would put $1,764.95 in her pocket - $1,331.95 of which would be her after-tax profit
yes..bitcoin remains taxable
People's interest in investing in bitcoin is increasing as the price of the digital currency jumps. Director of Counseling, Services and Public Relations of the Directorate General of Taxes Hestu Yoga Saksama also emphasized that the profits from the sale and purchase or investment of bitcoin are taxable income.
"If there are profits in selling / buying or investing in bitcoin, it is taxable income (PPh). In accordance with the self assessment system, the taxpayer reports the income in the annual tax return and pays taxes, "
Bitcoin investments are taxed as a capital asset
To properly pay taxes on an investment in bitcoin, you'll need to wrangle some information from each sale you conducted over the last fiscal year. This includes the basis for each amount of bitcoin you sold, the date you bought it, the date you sold it, and the price at which you sold it.
Short-term gains are taxed like regular income, so the rate is equal to your federal income tax bracket. Long-term gains are taxed at a lower rate, but still according to your income level.
The breakdown is as follows:
People in the 10% and 15% brackets pay 0%.
People in the 25%, 28%, 33%, and 35% brackets pay 15%.
People in the 39.6% bracket pay 20%.
Two hypothetical cases
Taking all that into account, consider a sample bitcoin investor who makes $75,000 a year.
Hypothetical case #1: short-term gain
The investor bought one bitcoin on January 2, when it cost $1,000. After it hit $2,000 later that May, she decided to sell, for a profit - or realized gain - of $1,000.
In this case, the basis was $1,000 and the realized gain was also $1,000 ($2,000 sale price minus the $1,000 basis). Since she held the investment for less than a year, it was a short-term gain, meaning the money would be taxed at her tax bracket of 25%, for a total tax bill of $250. All told, she'd keep $1,750 from the sale - $750 of which would be her after-tax profit.
Hypothetical case #2: long-term gain
Now let's assume she bought the bitcoin a year prior, on January 2, 2016, when the price was just $433. If she sold at the same time - when it hit $2,000 - she'd realize a gain of $1,567. Since she held it for more than a year, the gain would be taxed at 15%, for a total tax bill of $235.05. The sale would put $1,764.95 in her pocket - $1,331.95 of which would be her after-tax profit