If you can lock in profits on Bybit, you will be obligated to pay taxes. However, it is very painful to be taken as tax even though you are making a profit. So, I listed the things that are recognized as expenses in virtual currency trading.
- List of items that can be used as expenses
- Items that cannot be covered as necessary expenses
- Not reporting is a risk
- Is a final tax return necessary?
- When to generate income from virtual currency
- What happens when unpaid virtual currency taxes are discovered?
List of items that can be used as expenses
I’ve put together a list of things I can afford. The point is whether or not these things can be used as expenses for virtual currency transactions. The “cost of books to acquire investment knowledge” in virtual currency trading can be recorded as a necessary expense. Either way, you’ll need proof first, so be sure to keep your receipts.
Seminar fee, transportation fee, accommodation fee
If you participate in virtual currency-related events or seminars, you will have to pay for seminar participation, accommodation, and even transportation. These costs can be claimed as expenses.
It is a fee that occurs in virtual currency transactions, but it can be recorded as an expense. Expenses include withdrawal fees, deposit fees, and even transaction fees.
In virtual currency, if you are doing consulting etc., you can also apply for expenses used for these.
If you are trading using a PC in trading, you can use it as an expense. Must be less than 100,000 yen. If it exceeds 100,000 yen, it is basically subject to depreciation.
If you are trading using your smartphone, you can expense it. In this case, the handling will change depending on whether it is over 100,000 yen or less.
If you are trading on a personal computer, you can also use peripherals such as mouse, keyboard, and printer as expenses.
Rent, utility bills, water bills
This is where it becomes very difficult to draw the line. Basically, it is recognized as a necessary expense, but you can only apply for the amount used for the transaction. Gas and water are generally difficult because they have no direct relationship with cryptocurrency transactions.
Items that cannot be covered as necessary expenses
The example above is what you can afford. On the other hand, there are things that cannot be covered as necessary expenses. This is basically not related to cryptocurrency trading. For example, transportation expenses when going on a family trip have nothing to do with trading. There is a possibility that a tax audit will come later, so if you record the expenses strangely, you will be in trouble. It is important to leave objective evidence such as photographs and documents.
Not reporting is a risk
It is a virtual currency that anyone can easily invest in, but of course, if you earn money from trading, you will have to file a tax return. Profits are subject to tax when they are made. Since you are making money from investing, you will need to deal with it in the same way as when you make money from stock or currency trading. Please be aware that if you leave it unattended, you run the risk of being investigated by the tax office and being subject to additional taxes, so please be aware that this is very dangerous.
Is a final tax return necessary?
Income earned from virtual currency is considered miscellaneous income. Of course, profits from virtual currencies are subject to tax, just like earnings from stocks and foreign exchange. Some people who have made profits from virtual currency trading may be thinking of avoiding paying taxes by not filing a final tax return, but they will definitely be found out as the tax office will investigate soon. Masu. Virtual currency exchanges have transaction history, so the tax office will know.
When to generate income from virtual currency
Just buying and holding virtual currency will not generate profits, but if you sell it, you may generate profits depending on the selling price. In addition, you may be able to make a profit when exchanging your current virtual currency for another virtual currency. Those who use the Internet may earn profits when purchasing products and services using virtual currency, such as when shopping online or at physical stores. Income will also be generated at this time.
What happens when unpaid virtual currency taxes are discovered?
If you make profits from virtual currency transactions but do not pay taxes, you will be subject to additional tax. The main types include undeclared tax, delinquent tax, and heavy added tax, and in the worst case scenario, you may be subject to criminal penalties. Be especially careful in the case of heavy additional tax, as this includes cases of concealment, under-reporting, and false declarations.