Libra announced this morning that it would be providing free support, on-demand for Bitcoin users that have signed up for any of its products this tax season. Libra currently offers three products – LibraTax for Individuals, Libra Business for Merchants and Libra Pro for Accounting and Tax Professionals.
Last year, the IRS issued guidance that Bitcoin and other digital currencies would be taxed as capital assets. This meant that unlike other fiat currencies, all acquisition and redemption prices would need to be kept on record by users. This is because if at any point in time Bitcoin, or another digital currency, is redeemed at a price that is worth more than the fiat equivalent that it was acquired for, the user would be subject to reporting a capital gain, which is a taxable event.
“It’s a complex situation. A lot of people started using Bitcoin last year and there’s a big knowledge gap across the user spectrum when it comes to how it works from a technical standpoint and how that relates to accounting and compliant tax reporting,” said LibraTax CEO Jake Benson. For example, there are several types of events that due to the earlier IRS guidance are reportable events:
- Purchasing something with Bitcoin (e.g. cup of coffee, plane ticket, etc.).
- Receiving a tip or gift from another user online and cashing it out.
- Bitcoin Mining
- Getting Paid in Bitcoin
“A lot of people realize they need to be doing something, but the learning curve is steep when you have to figure out how to get your transactions exported, reconciled and then correctly balanced to see if you have a tax liability – we’ve seen it first hand. Heading into the tax deadline we’re going to do our best to offer this kind of support on-demand to any of our users, for free,” said Benson.
Libra Support On-Demand is available now, starting today. Existing users can access this support by logging in and clicking the “Have a Question?” link at the top of the page.
Disclaimer: While Support On-Demand Service is not for providing individual or organizational tax advice, we are happy to help users find proper resources, reconcile multiple accounts, or give any other practical record keeping advice relating to our service.