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Are you a UNITED STATES resident with Binance or KuCoin accounts? Your funds may get FROZEN if you fail this important reporting obligation

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binance irs

An essential overview of reporting obligations under FBAR and FATCA

Many individuals who entered crypto space assume anonymity.  Those who were early miners may have gotten some of that anonymity but those who have started buying, trading and transferring their first Bitcoin and other cryptocurrencies were shaken up when IRS won the court grant to subpoena Coinbase to gather taxpayer information from 2013 thru 2015.

We expect this trend to continue into the 2018 tax year (implemented in 2019) where IRS may go back and request information related to 2016 thru 2018.

If the only place you ever bought your cryptocurrency is Coinbase or Gemini or Bittrex or other US-based exchanges and you hold all of your cryptocurrencies in these US-based exchanges or your private digital wallets (like Myetherwallet) – then you are NOT subjected to FinCEN but may be subject to FATCA rules. Read on to learn more.

However, if you are among the 1000s of individuals who held accounts with Binance, KuCoin, Huobi or other non-US exchanges any time during 2018 calendar year then you are required to disclose your account value to the United States treasury under FBAR guidance on a FinCEN Form 114, if you meet the filing thresholds.


Failure to do so can result in serious monetary penalties and/or criminal proceedings, or both.  Below is the direct screenshot from the instructions:

U.S.C Section 5322 (a) and (b) both cover penalties ranging from $250,000 to $500,000 or 5 to 10 years of prison time or both.

That is the extent of seriousness involved in failing to disclose the foreign financial accounts.

Even if you are not required to file FinCEN Form 114, you may have Form 8938 reporting requirements under FATCA regulations. More details can be found in the FREE guide here.

What is FBAR and FinCEN, and who is required to file?

FBAR stands for Foreign Bank Account Reporting. This is an informational disclosure made to the United States Treasury on an annual basis on FinCEN Form 1141.

FinCEN stands for Financial Crimes Enforcement Network.

binance irs

Who needs to file FinCEN Form 114?

Instructions say that “A United States person that has a financial interest or signatory authority over foreign financial accounts must file an FBAR if the aggregate value of foreign financial accounts exceeds $10,000 at any time during the calendar year” needs to file FinCEN Form 114.

United States person includes US citizens, green card holders, and US tax residents.

Foreign Financial account(s) includes a financial account located outside the US.
Please note that while the digital wallets (like Myetherwallet) are not covered under the
definition of Foreign Financial account – crypto exchanges located outside the US still falls
into the definition of Foreign Financial account and is subjected to FinCEN Form 114
rules.

Aggregate value: In determining whether you have FinCEN Form 114 filing
requirement or not, you have to consider the aggregate value of ALL non-US accounts
together. Even if you have minimal amounts in most accounts, once you cross the
$10,000, you will have to report ALL of your non-US accounts on the FinCEN Form
114.

Example: Let’s say, you have accounts with Binance, KuCoin, Huobi as below.

Binance: Highest balance during the calendar year 2018 – $4500
KuCoin: Highest balance during the calendar year 2018 – $1500
Huobi: Highest balance during the calendar year 2018 – $500
OkEX: Highest balance during the calendar year 2018 – $5000
Cryptopia.co.nz: Highest balance during the calendar year 2018 – $50

Remember, what you are looking for is NOT balance as of December 31st, rather, highest balance during the year, even for a day counts.

Since the total of all of the above accounts exceeds $10,000 you will need to report ALL
of your foreign financial accounts. Even the Cryptopia account with $50 needs to be disclosed.


How to file?

FinCEN Form 114 needs to be filed online and cannot paper filed.

You have to go to the BSA page and select the appropriate account type (individual or institution) and enter the information requested.

Line by line filing instructions are included in the FREE guide.

Due date: FinCEN Form 114 is due by April 15 of filing year (for 2018 calendar year –US tax returns are due on April 15, 2019), however, if you timely extend your IRS tax returns to October 15, 2019 – your FinCEN Form 114 forms are due by October 15, 2019.

IMPORTANT: Your FinCEN Form 114 is due by a maximum extended due date of October 15.  Even if your federal tax returns are extended beyond October 15 – such extension beyond October 15 does not apply to FinCEN Form 114

What is FATCA and why should I care?

FATCA, Foreign Account Tax Compliance Act, was enacted to avoid tax evasion by investing in offshore financial accounts/assets.  FATCA regulations cover the following forms2:

  • Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts
  • Form 3520-A, Annual Information Return of Foreign Trust With a U.S. Owner
  • Form 5471, Information Return of U.S. Persons With Respect To Certain Foreign Corporations
  • Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund
  • Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships
  • Form 8938, Statement of Specified Foreign Financial Assets

We will confine our discussion to Form 8938, Statement of Specified Foreign Financial Assets, in this document.

Form 8938

Who needs to file Form 8938?

You can get the details here, however, keeping it simple, a United States person who has any financial account maintained by a foreign financial institution (or holds stocks or securities in the foreign entity) and the aggregate value of such accounts is above the filing thresholds.

Who is a United States person for Form 8938?

Definition of United States person is same for Form 8938 as it was for FinCEN Form 114.  A US citizen, green card holder or US tax resident, all fall within the definition of United States person.

What are the filing thresholds for Form 8938?

Thresholds change based on your marital status and where you live. Below table summarizes the Form 8938 filing thresholds.

Marital StatusLiving In31-Dec
(Value as of)
Any time of the year
(Value as of)
UnmarriedUnited States$50,000 $75,000
Married, filing jointlyUnited States$100,000 $150,000
Married, filing separatelyUnited States$50,000 $75,000
UnmarriedOutside United States$200,000 $300,000
Married, filing jointlyOutside United States$400,000 $600,000

Difference between FBAR and FATCA

FinCEN Form 114 is part of FBAR filing with the United States Treasury and Form 8938 needs to be filed with the IRS tax forms.  Both of these filings are based on threshold, as we discussed earlier.  These thresholds are summarized below.

Everyone who has Form 8938 reporting requirement has FBAR reporting.  However, everyone who has FBAR reporting may not have Form 8938 reporting.

One page summary of filing thresholds and due dates for FinCEN Form 114 and Form 8938

FinCEN Form 114Form 8938
Filed with
United States Treasury
Internal Revenue Service (IRS)
Address to file
Online, no paper filing allowed
Include as part of your 1040 tax return
Value to disclose
$10,000 or more in aggregate value
Thresholds depend on your filing status and whether or not you live in United States, see below
When to file?
April 15 of following year (for instance, for 2018 calendar year - by April 15 of 2019
April 15 of following year (for instance, for 2018 calendar year - by April 15 of 2019
Is extension of date available?
Yes. If you filed a timely extension for your Form 1040, that same extension applies to FinCEN Form 114. If your tax returns are extended beyond October 15, you CANNOT extend beyond October 15
Yes. If you filed a timely extension by April 15, you can extend up to October 15
Exchange rate source
Link
Link
Joint disclosure?
Yes, specify Spouse details on lines 25 onwards in the joint section
Joint disclosure is available on a married filing jointly filed tax return

Download the FREE guide here to get:

binance irs

Line-by-line filing instructions for FinCEN Form 114 and FAQ covering below questions.

  • What exchange rates do I use to arrive at US Dollar values?
  • I own accounts jointly with my spouse, can I disclose them on the same form?
  • Exchanges do not assign account number, what do I write in place of Account number?
  • None of my accounts had more than $10,000 during 2018 calendar year, do I still file FinCEN Form 114?
  • Do I include account values in CoinBase and Gemini when determining the thresholds?
  • What if I work for an exchange but do not own crypto myself?
  • I maintain the account on behalf of a company, what are my obligations?
  • Are disclosure requirements different if I hold security tokens?
  • Are tokens held in my personal wallets, like MyEtherWallet or Trezor, need to be disclosed on FinCEN Form 114?
  • Are tokens held in my personal wallets, like MyEtherWallet or Trezor need to be disclosed on Form 8938?
  • Are all tokens considered securities for the purpose of Form 8938 filing for 2018 calendar year?
  • What is the big deal if I fail to disclose the FinCEN Form 114?

Thank you for reading this article.

All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.

Subscribe-top5-long-term-cryptocurrencies

IMPORTANT DISCLAIMER

Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.

We do not endorse or guarantee the accuracy of the information and claims made.

About the author

RK Reddy holds two Masters degrees, one in Accounting and another in Business Administration with over 15 years of experience in the financial services industry.

Read more about the author here.


CryptoSpace

6 Massive Benefits of Cryptocurrency

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Benefits of Cryptocurrency

It is normal to be hesitant about using cryptocurrency as the medium of financial transactions. 

There is a school of thought which believes, it is a domain suitable for criminals, fraudsters, and terrorists. Cryptocurrencies allow them to maintain anonymity for discreet transactions and ransomware scams.

However, the increasing acceptance of Bitcoin as a digital currency has initiated a positive perspective around this mode. It brings a distinct set of pros for the users, making them overlook the risks tag along.

According to the Finder, a post on social media surfaces about Bitcoin every three seconds. If we do the math, it means 1203 posts pop up per hour, making it to 20 posts per minute.

A more general view on the crypto landscape speaks of its overall growth, too. Block Social tells us how cryptocurrency exchanges around the globe have exceeded 300 during 2020.

In fact, the success of crypto shows us the loopholes of the traditional banking system. If you, too, want to leap on this bandwagon and aren’t sure about your next move, this is the right place. Our blog sheds light on the positive aspects of cryptocurrency that make it a more established form of financial trade. 

Healthereum

1. Easy transactions

When dealing with brokers or legal representatives, you have to pay the transaction fee from time to time. This comes along with immense paperwork, commission, brokerage charges, and so much more. Using cryptocurrency eliminates the need for a middle man. The transaction changes into a one-to-one affair taking place on a secure network.

No wonder Forbes stated that adopting blockchain technology can save financial organizations around $12 billion yearly. A deduction of extra charges from third parties and reduced operations cost is saving millions for huge organizations.

Moreover, the transactions are transparent, making it easier for you to establish audit trials. There is no more confusion over who pays whom. All parties involved in the transaction know each other quite well. Accountability on each party grows.

2. Asset transfers

A financial analyst rightfully describes cryptocurrency blockchain to be a “large property rights database.” On the one hand, it helps execute and enforce two-party contracts on commodities such as real estate and automobiles. At the same time, it also facilitates special modes of transfer. 

As per Born2Invest, Bitcoin alone is responsible for an average of 350 000 daily transactions on the Blockchain. Meanwhile, Coinbase has 30 million cryptocurrency users (Block Social). The increasing figures of each crypto speak of its acceptance worldwide.

The parties involved in asset transfer can design contracts and add third-party approvals at a later date. It also helps to reference the external facts and gives the parties exclusive governance of their account. It reduces the time and money involved in asset transfers. Perhaps this is why US federal government spending on Blockchain shall reach $123.5 million by 2022.

3. Confidential transactions

Cryptocurrency purchases remain discreet. Unless a user voluntarily publishes his transactions, the purchase is never associated with their identity. In official scenarios, such as when you put your cars for sale, the parties must reveal an association with their cryptocurrencies. It helps to establish trust and relevance.

Within the cash/credit system, your entire transaction history turns into a reference document for the banks/credit agencies involved. On the contrary, cryptocurrency is a transaction that is a unique exchange between two parties. They can negotiate and agree on preferable terms. The information exchange takes place on the “push” basis. This means you transmit only that which you wish to send to the recipient and nothing else.

It keeps your financial history secure and guards you against identity theft. Chances of which are quite high under the traditional transaction system. 

On top of this, the combination of Blockchain with IoT is considered revolutionary by the experts. This has accelerated data exchange, lowering the operation costs, and improved the security of files. Your Tech Diet predicted that 75% of the IoT industry would adopt Blockchain technology by the end of 2020. Lack of exposure is, thus, something the entire industry is looking for.

4. Transaction Fee

You have probably faced hefty monthly account statements from your bank/credit companies. The transaction fee charged at every transaction you have made might leave you shocked. The whopping fee of multiple transactions can take you by surprise at the end of each month.

In the case of cryptocurrency exchange, the data miners receive their share from the cryptocurrency network involved. Transaction fee does not apply as the remote and separate computer systems that do the number-crunching get a pretty fair share. 

According to Investopedia, the Bitcoin reward for miners halves for every 210 000 blocks added to the chain. Nonetheless, this system has freed the transaction parties to pay the fee, making it the most feasible. 

However, there might be some external fee involved if you engage a third-party management service to maintain the crypto wallet. These charges are likely to be quite less than the transaction charges levied by the traditional banking system. 

5. Hold Ownership

The traditional banking system works in a manner where the amount goes to the nominee if a person passes away. The chances of the account closing are quite high when you infringe the terms of their services. Unlike this framework, digital currencies give you the sole ownership of private and public encryption keys. This makes it easier for you to identify the encryption network.

6. High security

Once a party authorizes the cryptocurrency transfer, they cannot reverse it. This is not the case in “charge-back” transactions allowed by the credit companies. Cryptocurrency gives you reliable encryption throughout the transaction process to keep it protected from bugs and malicious entities.

Systems like Binance Smart Chain are enabling people to do more with BTC.

Final Thoughts 

Cryptocurrency is taking the financial world by storm, and we know the reasons why. It is about time you kickstart your digital finances journey and make the most out of it. Who knows what surprises are about to come later in this landscape!

Thank you for reading and sharing this article. We appreciate you.

Stay safe and healthy!

Top 5 Cryptocurrencies 2020

IMPORTANT DISCLAIMER

Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.

We do not endorse or guarantee the accuracy of the information and claims made.

All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.

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Cardano or PolkaDot? Which One to Invest In?

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Cardano vs Polkadot

There is a new battle in the crypto space.  Cardano (ADA) and PolkaDot (DOT) maximalists are headbutting as to which project is better and why.

The conversations are intense to say the least and we will try to provide our view on which one we are leaning toward and the reasons why, in this rather short article.

Just to be clear, we are invested in both ADA and DOT so we have a vested interest in both projects, however, we are now asked to pick one over the other and that brings us to this article.

Decentralization

The whole spirit of cryptocurrencies is the concept of decentralization, however, some of the more popular projects don’t seem to have a grasp of what that means.

Diem (previously Libra) or XRP etc., are controlled by a group for validators who could, in theory, easily collude, in our view.

With DOT, things are not as centralized as some other projects with about 1000 validators securing the platform.

However, ADA has the most number of nodes and has most of its circulating supply staked on its wallet. The community behind ADA has biggest proponents of decentralized frameworks.

ADA: 8 (top 10 is reserved for BTC)

DOT: 6

Team

Cardano boasts the maximum number of Ph.Ds on its team and has a more decentralized team structure.  You have teams that are working exclusively on wallet and staking while you have other teams focusing on interoperability. Yet, another team is focused on bridging projects from Ethereum to Cardano.

DOT has the ammunition of Gavin behind it. He is undoubtedly one of the brilliant minds in the space. 

However, as we learned in basic math, sum total is always greater than an individual unit.  This applies more aptly with these projects. In our opinion, Cardano has a greater edge when it comes to collective human capital.

Having Charles Hoskinson helps ADAs impression.

ADA: 8

DOT: 6

Social presence

There is no competition when it comes to social presence and engaging the community when it comes to the leaders of these two projects.

While DOT’s founder Gavin might come out as eccentric and polished in the social media, Charles takes the cake in engaging with his audience and making things sensible for the community.

ADA: 9 

DOT: 7

On a mission

Whenever you hear Charles speak about ADA you will immediately understand that he is on a mission to bring the marvels of blockchain enabled financial services to all corners of the world.

Cardano’s team is now focused on the South Africa continent to bring the under-previleged onto the world commerce through their platform. They are even close to signing a contract with Ethiopia government in 2021.

While DOT is catapulting the entire space forward it just lacks the same charm that comes with a project on a grandiose mission.

ADA: 8

DOT: 6 

Miscellaneous considerations 

Market cap: ADA has $20 Billion market cap while DOT has $19 Billion, as such they are on par with each other when it comes to valuation. The large cap is a stamp of approval from the crypto community.

Price: ADA is at around 60 cents while DOT has been stabilising at $20 at the time of this writing. When the newbies come to the market and they see they cannot afford Bitcoin or Ethereum, they will most likely go after the projects that are under $1. This does not mean DOT is inferior, it is just an edge that low priced tokens have over higher priced projects. It’s just a newbie mindset that drives higher demand during bull runs to lower priced projects.

Inflationary supply

DOT has an inflationary supply model while ADAs supply is capped.

Yes, DOTs supply is far larger than DOT, however, there is no new minting on ADA when compared to DOT.

Mainnet

DOTs technology is operational and is onboarding projects already.  ADA is scheduled to launch its mainnet this month (Feb 2021). ADA has been in works for many years now and if their product matches the hype and the wait – then it may not matter as much that they are late to the party. However, if there are issues with their mainnet – it may not bode well for ADA.

Conclusion: Total score

ADA: 33

DOT: 25

If you are a DOT fan you might think this score is skewed.   If you are an ADA fan you might think it should score perfect points in all fronts.

In fact, there are some areas where DOT is a clear winner like having a functioning platform. ADA, in our opinion, takes the prize with clear fandom, gigantic mission and a total brainiac project. 

Thank you for reading and sharing this article. We appreciate you.

Stay safe and healthy!

Top 5 Cryptocurrencies 2020

IMPORTANT DISCLAIMER

Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.

We do not endorse or guarantee the accuracy of the information and claims made.

All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.

Continue Reading

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Best of the Best YouTube Channels to Follow for your Crypto Fix

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Best Crypto Youtubers

There are literally 100s of crypto-experts on YouTube who claim to have cracked the secret code that can make you millions in crypto riches. 

Who should you follow?  

We have followed many YouTubers, subscribing and unsubscribing to avoid the noise and after having been in this space for over 4 years, we have narrowed our favorite crypto YouTube channels to just a few.

In this article, we will show you our favorite YouTubers and what we like about each one of them. 

Overall number 1: Coin Bureau

coin bureau When it comes to deep analysis, composed demeanor and outright professional crypto channel in the entire space, we have not come across anyone better than Guy.  

Not only is he great at the reviews and in depth analysis, if you have followed the channel long enough you will realize that he reviews the gems long before others pick on the momentum.  

He picks solid projects, never shills a shitty project to his followers and is upfront about his views which he backs up with solid research.

This is the best no-shill and no bull crypto channel on YouTube in our view.

Best original content: Chico Crypto

chico crypto review

If you love a bit of quirky, goofy and somewhat out there viewpoints on the crypto space then there is no one better than Tyler at Chico Crypto. 

His investigation stretches the boundaries of research (and sometimes common sense) but he does do a bang up job on every video.  

I am yet to come across a boring video on this channel.  I will admit that his live streams can be a drag sometimes but his followers seem to relish his presence.

You may not like or agree with what Tyler presents on this channel but you will absolutely be floored by the originality.   

Best TA: TIED: Crypto Capital Venture & Tyler S

                         Crypto Capital Venture Tyler S crypto

With under 90K subscribers at the time of this writing, Dan may not be the most popular of the Crypto channels [yet] but his TA analysis is just so easy to follow.

Dan makes it easy for non-technical folks to understand what’s going on in the market in the language of TA.

There are other folks on YouTube who are good at TA but their videos are so obnoxious that they leave you with a massive headache.  

Not Dan’s Crypto Capital Venture channel.   Dan walks you through the markets in such a calm, composed and professional manner that you might start caring about those candles.

We are forced to share the Best Title for crypto TA on YouTube with Tyler S. 

Tyler’s expertise on TAs is quite awesome and he has a funny way of delivering it too.  

Best expertise on the markets: Alessio Rastani

Allesio RastaniIt doesn’t matter if you are just lurking around the crypto markets or if you trade in the traditional markets…Alessio is one of the best guys on YouTube for great insights into the broad market and its impact on Crypto.

While everyone on YouTube (not the people on this list, of course) is either quick to FOMO or FUD, Alessio is just grounded in fundamentals and technicals.

When you are high on FOMO, he can bring you to the ground.

When you are getting buried in FUD, he can lift you up with facts, not false hopium.

Alessio is personable, professional and an honest guy to follow to understand the markets ahead of others.

Best round up of the market: AltCoin Daily

Altcoin DailyWant to stay up-to-date on what’s happening in the crypto space but don’t have time to keep up?  

Fear not. AltCoin Daily got you covered.

This channel is just a gem among the channels that bring crypto market updates in a concise and palatable format.

You can sense the dedication in the way Austin brings the updates and his opinions in front of his audience. No wonder the channel has recently hit over 420K subscribers.

Best humble and honest take: Crazy 4 Cryptos

Crazy 4 crypto

What does Crypto mean to you?

Most people will say ‘Freedom’, yet, most of the YouTubers we see on the Tube will be broadcasting from their bedrooms or backyards (nothing wrong with that) but not Dave.

He has been in Thailand and streams his videos directly from the beach.

You will immediately connect with his simpleton style and honest reviews.  

He has been touting about Theta when it was trading in cents and now those who followed him are very happy.

Besides Theta, Dave talks about a lot of topics in terms of storing your coins, being careful with people and how to have a long-term plan in space.

Honorable mentions

Team Underground (TA)

We had too many channels to weed out for the TA category and that is why we had to pick two winners, however, Team Underground is a channel we cannot skip.

This underdog channel has been more right about the calls than any other mainstream channel. If you like your TAs and technical side of crypto – be sure to check this channel out.

BitBoy

People either love him or hate him.  There is no middle ground when it comes to BitBoy.  

Personally, we have to weed out a lot of noise while browsing through his channel since he picks a new project every few days (or weeks) and can become overwhelming. 

However, the fresh content is worth the watch.

EllioTraders

The guy behind this channel is truly vested in the space. So much so that he recently launched his own crypto project.

It’s definitely refreshing to see the YouTuber taking his expertise into a live project.  

The reason we did not list this channel on the BEST list is because of the constant feed of projects he pitches that is a bit overbearing for our taste.  

Nevertheless, a great channel and great recommendations.

Conclusion

There are 100s of YouTube channels out there but not everyone is worth your attention. We hope you found some channels of interest through this article.

Note: if we missed any gem of a channel, please let us know and we will be more than happy to add it after review.

Thank you for reading and sharing this article. We appreciate you.

Stay safe and healthy!

Top 5 Cryptocurrencies 2020

IMPORTANT DISCLAIMER

Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.

We do not endorse or guarantee the accuracy of the information and claims made.

All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.

Continue Reading

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