Deadline Looms: Understand Your Crypto Reporting Obligations
The Norwegian Tax Administration (NTA) has made headlines as it issues a stern warning to cryptocurrency traders. As the April 30 tax return deadline approaches, it’s crucial for anyone who traded or owned crypto during 2020 to ensure they report it on their tax returns. Failing to do so could lead to additional taxes—something no one wants to face.
The Crypto Reporting Conundrum
According to NTA, only a meager 2% of cryptocurrency holders actually reported their crypto assets in 2019—a staggering statistic when you consider the estimated 235,000 crypto users in Norway. That means less than 4,700 individuals played by the rules. Marius Johansen, an NTA senior adviser, noted that many crypto owners might think their holdings are automatically included on tax returns. Spoiler alert: they’re not!
The Tax Implications of Crypto Gains
In Norway, anyone making gains from crypto will be taxed at a 22% rate, comparable to the American capital gains tax. June might be the month for blooming flowers, but don’t expect any blooms on your deductions if you don’t keep records for your losses. Yes, you’ll need to furnish proof of losses incurred from crypto investments when filing your 2020 paperwork.
Cryptocurrency: Not as Anonymous as You Think
Marius Johansen also sought to demystify the illusion of cryptocurrency anonymity. “Many people believe these transactions are hidden in the shadows,” he argued, adding, “but crypto transactions are actually visible; the agency is engaged in thorough monitoring of activity.” This revelation could give some sleepless nights to those who have been a bit too relaxed about their tax declarations.
Bridging the Tax Gap: A Global Concern
The NTA and cryptocurrency aren’t just a local issue; it’s part of a larger global concern about the escalating tax gap. For context, Norway reported about $20 million of taxed income stemming from crypto, while the U.S. tax gap has ballooned from around $400 billion in 2013 to a whopping $1 trillion this year. With U.S. lawmakers, including a bipartisan group backing a new bill to curb tax evasion on crypto, it seems this issue is heating up globally.
Your Action Plan: Don’t Get Burned
- Review your crypto transactions from 2020.
- Decide what gains or losses you need to report.
- Compile documentation for any exchanges you used.
- Stay informed about potential legislative changes in the crypto tax landscape.
As April 30 draws near, be proactive—embrace your role as a responsible citizen and ensure your crypto dealings don’t come back to haunt you later.
