Americans who have been investing in digital assets such as Bitcoin could be charged up to a 37% tax on purchases of nonfungible tokens (NFT) under a possibly new NFT tax.
Intuit Inc. Chief Executive Officer Sasan Goodarzi warned that U.S. residents who have tried their luck in digital assets and actively traded equities on commission-free websites could be surprised with their tax bill this year. He said that the situation was going to be common throughout tax season.
NFT Tax Bill
The CEO said that a lot of people simply did not understand the consequences of their actions within the crypto industry. Goodarzi said there were plenty of millennials in the United States who actively traded with digital assets amid the coronavirus pandemic.
In an interview, he said that a lot of these Americans would be shocked to see how much money they actually lost or how much they actually owe because they were, in essence, gambling their money. Recently, lawmakers have suggested that they are planning to aggressively act against the crypto industry, according to MSN.
They said they wanted to ensure that people who purchased NFTs were taxed appropriately based on the sale price. However, a vague tax code may also provide Bitcoin investors with some advantages.
A vague tax bill could allow investors to claim deductions over losses that they later reinvested within a certain time frame. On the other hand, some people who used platforms such as Robinhood Markets Inc. to trade over the past year, the majority of whom are most likely first-time investors, are confused about the possible implications of an NFT tax code.
Intuit is taking the initiative to assist confused investors by hiring experts to help filers online in a service called "TurboTax Live." Goodarzi said that the program had become the company's fastest-growing platform in history.
The CEO said that in most cases, investors were unaware of the effects of the money that they made in the crypto industry. Goodarzi noted that Intuit already had more than 50 million TurboTax customers. He said they were anonymously monitoring data patterns and providing insights to help investors, as per Bloomberg.
Bitcoin Tax
The situation comes as Indian authorities similarly look at implementing a tax on digital assets and NFTs. The country's finance minister, Nirmala Sitharaman, said that the government planned to impose a tax of 30%.
During his remarks on Tuesday, Sitharaman noted that losses from sales of NFTs and the use of cryptocurrencies could not be offset against other income sources. The official pointed out that this was another disadvantage in trading and investing in digital assets.
The crypto industry suggests that roughly 15 million to 20 million investors are trading within the market in India. The numbers have resulted in around $5.37 billion total crypto holding.
Some proponents of digital currencies have been hoping that implementing a formal tax framework could spare the industry from much more aggressive suggestions. According to Reuters, ZebPay Chief Executive Avinash Shekhar noted that the 30% tax may be high, the proposal was a positive step as it allows for the legalization of crypto.
