US President Joe Biden plans to propose changes to cryptocurrency taxation in the upcoming budget plan, according to a Wall Street Journal report. March 8.
Biden’s Budget Plan Targets Wash Trade
Biden’s budget plan could have a direct impact on cryptocurrency investors.
The Wall Street Journal says the president will propose changes to crypto tax rules covering wash trading. While the rules for wash trading apply to stock and bond trading, these rules currently do not apply to cryptocurrency trading.
This means that an investor can sell a particular investment and accept a tax deductible loss before reinvesting. This is an illegal activity that the government definitely wants to prevent.
The new crypto tax policy is projected to raise $24 billion. It will be part of Biden’s broader 2024 budget plan, which aims to reduce the federal budget deficit by $3 trillion over 10 years. The proposal may not succeed due to opposition from Republicans, who now hold a majority in the House, despite Biden’s Democratic leadership and a Democratic Senate.
Biden is set to announce the new budget on Thursday, March 9.
Other changes to crypto tax
There is no guarantee that Biden’s changes will take effect, but various recent tax changes will affect US crypto investors this season.
The IRS expanded the scope of its crypto tax rules in February. These changes mean that anyone who has worked with digital assets must report their activity.
Other reports suggest that non-fungible tokens (NFTs) may be taxable. Additionally, some cryptocurrency exchanges began making his 1099-B forms available to users in 2022, giving the crypto investor more information to report to her IRS.
A recent third-party survey by CoinLedger found that many cryptocurrency investors do not include cryptocurrency transactions on their tax returns when required. Only 58% of those surveyed were confirmed to have cryptocurrencies on their 2022 tax returns.