October 15th: Deadline for US Personal Income Tax Return Extensions

If you filed for an extension on your personal income tax return, you still have one month left to file in order to avoid a penalty. The deadline to file is October 15, 2015. In early 2014, the IRS issued guidance that classified bitcoin and other digital currencies classified as “property” rather than a “currency”  from a tax perspective. This meant that all US taxpayers must keep track of the price they purchase Bitcoin at, as well as the price they redeem it at. Depending on the number of bitcoin transactions a person has made in 2014, this is a large chore that could take hours, or even days in some cases. We built Libra to solve this problem – our platform helps users compile this information in as little as a few minutes by leveraging the reporting power of the blockchain. If you’re a US tax payer that filed an extension and you’re reporting digital currency-related transactions, here are some of the events that might be relevant to your return:

You bought and and sold any quantity of bitcoin in 2014. Let’s say that halfway through 2014 you had made a few different purchases totaling up to approximately one bitcoin, or any amount for that matter. For some reason or another, maybe because the price was dropping, you decided to sell a fraction of that one bitcoin that you owned. IRS tax guidance mandates that you should report this transaction to the IRS. What’s the correct purchase price you need to use to match up to this sell for compliant reporting on your return? Libra will compile this information for you.

You paid for something with bitcoin. Since you most likely didn’t buy exactly a cup of coffee’s worth of bitcoin, or the exact amount of whatever you paid for, you need to figure out the correct profit or loss to declare. Libra will determine the original purchase of bitcoin via several different reporting methods to determine your original cost (known as a cost-basis).

You received bitcoin as income/payment in exchange for goods and/or services. You have to recognize the bitcoin at whatever price it was worth at the time it was paid to you. You are liable to pay tax on the total amount that was paid to you based on your income bracket.

You received a mining reward/payout. Similarly to the previous example, you have to recognize the bitcoin at whatever price it was worth at the time it was paid to you. You are liable to pay tax on the total amount that was paid to you based on your income bracket.

For any of the above transactions types (there are some other potential scenarios as well, feel free to email us if you are unsure) Libra automatically imports your bitcoin transactions and automatically calculates all of this stuff in minutes. Also, if you’re a person that wants to remain anonymous, you can see what your tax situation looks like even without giving us any of your personal info. Regardless of your desire to remain anonymous on our platform, we offer several different versions of our products to suite your needs:

LibraTax for Individuals

LibraTax for Individuals is Libra’s entry level accountancy application for the blockchain designed for most uses of Bitcoin. It includes support for trading, holding, using, mining, gifting, tipping, and donating. LibraTax for Individuals is free to sign-up, along with an optional $19/year feature that allows users to generate a tax form, should they need it, that can accompany tax documents downloaded from the IRS website or generated in widely-used programs like TurboTax.

Libra for Business

Libra for Business is the workhorse of the Libra accounting suite. Like LibraTax, it is also built on top of the blockchain. It offers all of the features included in LibraTax for Individuals with the additional benefits of monthly reporting, and several different comprehensive reports that give businesses a full and complete perspective of anything they would need to know relating to their digital currency use that can be found in the blockchain. Libra for Business is free to sign-up and $49 to generate your reports and tax forms.

Libra Pro for Accountants

Libra Pro is a new product that has been designed for the accounting community at large that marries all of the features found in LibraTax and Libra for Business together under one application. As mentioned previously, it is very difficult for individuals and businesses to efficiently account for their digital currency use without Libra. For accountants, this problem becomes a nightmare as it is replicated with each additional client they onboard. Libra Pro, like LibraTax and Libra for Business, is also engineered to run as a real-time application on top of the blockchain in conjunction with the Bitcoin protocol – it is $99/year.

For any version, Libra has seamlessly integrated with several wallets and exchanges to help you easily compile your transactions, such as:

  • BitGo
  • Bitstamp
  • BitPay
  • ChangeTip
  • Circle
  • Coinbase
  • itBit

In addition to the list above, Libra has also developed a uniform import template, that allows users to import transactions from an even larger multitude of sites that support the exportation of transactions into CSV. This template also can be configured to allow the support of altcoins and payment protocols such as Ripple or Litecoin, too.

If you have any questions, please send us an email and we’ll be happy to help you compile any of the above information you need.