The Ohio State Treasurer wants to allow its residents to pay their taxes using cryptocurrencies. Ohio’s move arose because the state wants to simplify the process of paying taxes. Besides, the state leadership has been fond of the blockchain technology for a while now.
Ohio put forth this cryptocurrency policy to offer more options for both residents and businesses operating within the state to interact with the government. The state has been at the forefront in exploiting the gains of innovative technology in pushing its agenda.
Seeking to improve the efficiency of transactions and transparency is the key feature that propelled blockchain to the top of technology innovations. And, the Ohio leadership is using this to improve its public approval.
The Emergence of a Trend
While the use of crypto to settle tax obligations is not altogether new, its implementation and success in Ohio could signal a spread to other states. Already, Arizona, Illinois, and Georgia have legislation in their states’ assemblies that seek to legalize payment of taxes using cryptocurrency.
These moves are not only a chance for the residents to look forward to better and diverse tax payment options but also for tax consultants to prepare a raft of new advice provisions for their clients.
Why Pay Taxes Using Cryptocurrencies
Already, most cryptocurrency dealers know how to use cryptocurrencies to their advantage especially when doing their taxes. The same principles can apply to help individuals lessen their tax burdens.
Firstly, the federal government and most states are only in the process of figuring out how to implement the crypto tax. However, since the Internal Revenue Service (IRS) released a notice that puts cryptocurrencies in the same class as investment properties, trade in crypto and other associated use can result in either capital gains or losses depending on the outcome of the transactions.
On the basis of this premise, individuals can be classified in lower tax brackets if the cryptocurrencies they trade in take a dive during the tax year. However, the said law still does not exist or is unclear where individuals use crypto to offset their tax burdens. But it is safe to assume that similar thought processes may apply, especially because cryptocurrencies are very volatile.
The provisions allow taxpayers to offset as much as US$3,000 of their tax obligations from their capital losses each tax year.
Allowing individuals to pay taxes using cryptocurrencies is a prudent move. One that many states will most adopt soon. This is not only because the world is inching closer to universal adoption of crypto but rather because it opens up the options available for making payments. It will be interesting watching the benefits once the mechanisms of such payment methods are fully implemented. At the moment, it is wise to ask your tax consultant about any new tax payment methods that are open to you.