US investors who recently sold their Bitcoin suffered losses of nearly $1.7 billion this past year.

Many relatively new investors in the cryptocurrency markets suffered considerable losses due to the persistence of the cryptocurrency market downturn at the end of 2017, after Bitcoin peaked at close to $20,000 a few weeks prior.

Undeclared losses in the USA

Losses in the United States resulting from this decline are tax-deductible. However, according to a recent report, most investors who sold their Bitcoin at a loss have not deducted them from this year's taxes.

The report surveyed over 1,000 US investors at the end of 2018 and collected data on losses made from previous estimates. Unsurprisingly, many investors fail to consider the fact that the sale of cryptocurrency (for a profit or a loss) is taxable, and that failure to report it could lead to audits that would then require investors to pay penalties. Bitcoin sales in 2018 amounted to a staggering combined loss of about $ 1.7 billion. Unrealized losses of Bitcoin investors who have not yet sold their cryptocurrency are even higher, amounting to about $5.7 billion. On average, each trader would have lost about $718. The report highlights the fact that more than a third of investors do not intend to report their cryptographic gains or losses.

Our selection of verified and recommended brokers:

Here are the brokers that our experts have rigorously hand-picked and verified to help guide you towards your financial goals with confidence and peace of mind.

🥈 Trading 24 hrs, 5 days a week
IG

Quality customer service 🏆

Advantages

Minimum deposit: £0
Spreads: 0.5 pip on S&P 500, 1 pip on FTSE 100, 1 pip on CAC 40

Open and close your positions 24/5
Trading simulator with £10,000 virtual funds
Integration with TradingView and ProRealTime
Over 50 years of expertise

Learn more View the offer
🥇 Zero commission shares
XTB

Recommended broker 🏆

Advantages

Min deposit: £10
Spreads: 0.1 pip on eur/usd and eur/gbp, 0.3 pip for the sp500 and 0.8 pip for the FTSE 100

Buy shares and ETFs with no commission
Online courses for investors of all levels
Demo account with £20,000 virtual funds

Learn more View the offer
🥉 Ideal for CFDs
ActivTrades

Ultra-low spreads 🏆

Advantages

Minimum deposit: £0
Spreads: 0.5 pip on EUR/USD, 0.45 pip on FTSE 100 and 0.8 pip on EUR/GBP and EUR/CHF

Over 20 years of experience
Fund protection up to 1 million GBP
Ultra-competitive spreads
Advanced chart analysis with TradingView

Learn more View the offer

Lack of awareness on crypto trading

"Among US Bitcoin investors who do not intend to report sales, 35% mistakenly think they are not obliged to report their gains or losses in bitcoin investments",

the report says.

This is mainly due to the great uncertainty as to how investors should report their cryptocurrency transactions. For example, more than half of the surveyed Bitcoin investors had not even realized they could claim a deduction for their losses. Over 20% said they did not know how to report on profits, realised and unrealised losses. Once aware they were entitled to a tax deduction, about 58% of traders who realised profit and 53% who had realised losses said they were more likely to report on their taxes now that they were better acquainted with the rules and regulations.

The IRS’s responsibility

This report shows the need to raise public awareness on trading and investing in cryptocurrencies. By informing them of their obligations and duties as well as their rights, many issues with authorities could thus be avoided. As long as the Internal Revenue Service (IRS) has not begun to offer investors more insight on how to report profits and losses and severely punish individuals who do not declare their cryptographic trading activities, it is likely that many investors will continue to avoid reporting their Bitcoin transactions.