Robinhooder Will Pay $800,000 Tax From $45,000 Net Profit
During the third quarter of 2020, more than 8 million people started trading cryptocurrencies in the Robinhood mobile app, opening new accounts. And although some traded cryptocurrencies out of interest, now they can expect significant tax payments
For example, a 30-year-old novice investor whose net return on cryptocurrency trading at Robinhood for 2020 was only $45,000, faced a potential tax bill worth 20 times more. He’s going to have to pay $800,000 in tax.
During the pandemic, he decided to try his hand at opening a $30,000 Robinhood account. Its turnover ranged from $200,000 to $2 million a day. And in total reached 45 million dollars for the year. He bought and sold cryptocurrency, making 10–50 transactions daily.
In 2021, he received a notice of $800,000 in taxes, though he earned a net of only $45,000. He had to turn to financial planner Brian Vruk.
Vruk pointed to the mistake of the novice investor. He honestly reflected the profit, but did not know that it was necessary to reflect losses as well. Now we have to pay an impressive bill.
Note that such cases are the result of aggressive marketing Robinhood. The application does not charge commissions for trading, and has high popularity due to the gamification of the investment process.
With the application, the traditional process of capital raising becomes simple and exciting. However, this is fraught with different situations. And, not only with taxes.
This example should serve as a warning to young investors who undertake to trade cryptocurrency, without taking into account the possible consequences. Ignoring the rules can be dangerous.
Vruk emphasizes that ignorance of the rules does not exempt from the need to pay the bills. This applies to everyone, including newcomers. It is necessary to carefully study the tax and other consequences of trading in order to work in the legal field.