NODE40 to assist crypto traders determine their 2018 estimated tax liability

Crypto traders have until January 15, 2019, to avoid a penalty with their final estimated payment for 2018. The IRS imposes penalties for failing to pay sufficient tax during the year through withholding or estimated payments, as well as for failure to pay the required instalments on time.

An underpayment penalty will apply if the amount withheld (or paid through estimated taxes) is less than the taxpayer’s safe-harbor amount. Safe-harbor amounts will differ based on individual circumstances but for those with Adjusted Gross Income (AGI) of less than USD 75,000 in 2017, tax payment must be 100% of their actual 2018 tax due or at least 90% of their 2017 obligation.

For those with a 2017 AGI over USD 75,000, the payment must be 100% of their actual 2018 tax due or at least 110% of their 2017 obligation. If a penalty applies, it is typically 0.5% of the amount owed for each month that amount was unpaid.

The chance that crypto traders have underwithheld on their taxes in 2018, despite the falling markets offering tax relief to many, is higher than expected. A recent report by the Government Accountability Office (GAO) indicates that 21% of taxpayers, more than 30 million people, may owe taxes due to underwithholding in 2018.

NODE40 is a financial services provider for individuals and businesses that have interacted with cryptocurrency. NODE40’s flagship product, Balance, is a cryptocurrency tax calculation software that integrates directly with major cryptocurrency exchanges and custodial wallets.