Methods, systems, and tools for providing tax related services for virtual currency holdings
Technology is directed to tools for providing tax related services for virtual currency holdings, e.g., bitcoin holdings. The tax related services can include computation of taxes such as income tax, sales tax, and payroll tax for virtual currency holdings. The services can also include facilitating filing of the taxes with the concerned department. The tool can include a computing device configured to execute a tax application for computing the taxes on virtual currency holdings. The user provides information on a source of virtual currency transactions, e.g., an address of a bitcoin wallet, to the tax application, and the tax application retrieves the transactions from the source. The tax application categorizes the transactions into various transaction types and identifies the taxable and/or non-taxable transactions. The gain/loss and the associated tax are computed for the taxable transactions using one or more cost-basis methods.
1. A method, comprising:
receiving, by a computing device, a data set reflecting a plurality of virtual currency transactions performed by a plurality of digital wallets associated with a user;
converting, by the computing device, the data set into a plurality of virtual currency transaction records in a specified format;
identifying, by the computing device, among the plurality of virtual currency transaction records, a receipt transaction record having a first transaction identifier matching a second transaction identifier of a disposition transaction record;
excluding, by the computing device, from the plurality of virtual currency transaction records, the identified receipt transaction record and the identified disposition transaction record; and
computing, by the computing device, based on the plurality of virtual currency transaction records, an estimated income tax payable by the user.
2. The method of claim 1 , further comprising:
electronically filing a statement of the estimated income tax.
3. The method of claim 1 , wherein the estimated income tax is computed in a fiat currency.
4. The method of claim 1 , wherein the receipt transaction record represents one of: a purchase, a gift received, or a transfer from one of the plurality of digital wallets.
5. The method of claim 1 , wherein the disposition transaction record represents one of: a sale, a gift given, a donation, or a transfer to one of the plurality of digital wallets.
6. The method of claim 1 , wherein receiving the data set reflecting a plurality of virtual currency transactions further comprises:
accessing, via an application programming interface (API), a digital wallet of the plurality of digital wallets.
7. The method of claim 1 , further comprising:
assigning, to the plurality of virtual currency transactions, respective hash tag indicative of categories of transactions.
8. The method of claim 1 further comprising:
generating a report reflecting the plurality of virtual currency transactions.
9. The method of claim 1 , further comprising:
generating a report reflecting a gain or loss realized on the plurality of virtual currency transactions and a type of the gain or loss, wherein the gain or loss is represented in a fiat currency.
10. The method of claim 1 , wherein excluding, from the plurality of virtual currency transaction records, the identified receipt transaction record and the identified disposition transaction record is performed responsive to determining that a first wallet address of the identified receipt transaction matches a second wallet address of the identified disposition transaction.
11. The method of claim 1 , further comprising:
computing a gain or loss realized on the plurality of virtual currency transactions; and
presenting the computed gain or loss via a graphical user interface (GUI).
12. The method of claim 1 , further comprising:
receiving, via a graphical user interface (GUI), authentication information associated with a digital wallet of the plurality of digital wallets; and
utilizing the received authentication information for receiving the information from a virtual currency network.
13. A system, comprising:
a memory; and
a processor coupled to the memory, wherein the processor is configured to:
receive a data set reflecting a plurality of virtual currency transactions performed by a plurality of digital wallets associated with a user;
convert the data set into a plurality of virtual currency transaction records in a specified format;
identify, among the plurality of virtual currency transaction records, a receipt transaction record having a first transaction identifier matching a second transaction identifier of a disposition transaction record;
exclude, from the plurality of virtual currency transaction records, the identified receipt transaction record and the identified disposition transaction record; and
compute, based on the plurality of virtual currency transaction records, an estimated income tax payable by the user.
14. The system of claim 13 , wherein the processor is further configured to:
assign, to the plurality of virtual currency transactions, respective hash tag indicative of categories of transactions.
15. The system of claim 13 , wherein the processor is further configured to:
generate a report reflecting a gain or loss realized on the plurality of virtual currency transactions and a type of the gain or loss, wherein the gain or loss is represented in a fiat currency.
16. The system of claim 13 , wherein excluding, from the plurality of virtual currency transaction records, the identified receipt transaction record and the identified disposition transaction record is performed responsive to determining that a first wallet address of the identified receipt transaction matches a second wallet address of the identified disposition transaction.
17. A non-transitory computer-readable storage medium comprising executable instructions which, when executed by a processor, cause the processor to:
receive a data set reflecting a plurality of virtual currency transactions performed by a plurality of digital wallets associated with a user;
convert the data set into a plurality of virtual currency transaction records in a specified format;
identify, among the plurality of virtual currency transaction records, a receipt transaction record having a first transaction identifier matching a second transaction identifier of a disposition transaction record;
exclude, from the plurality of virtual currency transaction records, the identified receipt transaction record and the identified disposition transaction record; and
compute, based on the plurality of virtual currency transaction records, an estimated income tax payable by the user.
18. The non-transitory computer-readable storage medium of claim 17 , further comprising executable instructions which, when executed by the processor, cause the processor to:
assign, to the plurality of virtual currency transactions, respective hash tag indicative of categories of transactions.
19. The non-transitory computer-readable storage medium of claim 17 , further comprising executable instructions which, when executed by the processor, cause the processor to:
generate a report reflecting a gain or loss realized on the plurality of virtual currency transactions and a type of the gain or loss, wherein the gain or loss is represented in a fiat currency.
20. The non-transitory computer-readable storage medium of claim 17 , wherein excluding, from the plurality of virtual currency transaction records, the identified receipt transaction record and the identified disposition transaction record is performed responsive to determining that a first wallet address of the identified receipt transaction matches a second wallet address of the identified disposition transaction.