U.S. President Joe Biden will propose changes to crypto taxation in an upcoming budget plan, according to a report from the Wall Street Journal on March 8.
Biden’s budget plan will target wash trading
Biden’s budget plan could directly affect crypto investors.
The Wall Street Journal says that the president will propose a change to crypto taxation rules to target wash trading. Though rules against wash trading apply to stock and bond trading, those rules are not currently being applied to cryptocurrency trading.
This means that investors can sell certain investments and accept a tax-deductible loss before reinvesting — an illegal practice that the government undoubtedly wants to prevent.
The new crypto tax policy is projected to raise $24 billion. It will be part of Biden’s broader 2024 budget plan, which aims to cut federal budget deficits by $3 trillion over a decade. The proposal may not succeed due to opposition from the Republican party, which currently has a House majority despite Biden’s Democratic leadership and a Democratic Senate.
Biden is expected to release the new budget plan on Thursday, March 9.
Other changes to crypto taxes
While Biden’s changes are not guaranteed to come into effect, various other recent tax policy changes will affect crypto investors in the U.S. this tax season.
The IRS expanded the scope of crypto tax rules in February. Those changes mean that anyone who has dealt with digital assets must now report their activities.
Other reports suggest that non-fungible tokens (NFTs) could be taxable. Additionally, some cryptocurrency exchanges began to provide 1099-B forms to their users in 2022, providing crypto investors with more information to report to the IRS.
Recent third-party surveys from CoinLedger suggest that many crypto investors have not included crypto transactions on their tax reports when necessary. Only 58% of those surveyed confirmed included cryptocurrency on their tax reports in 2022.