Also known as virtual or digital money, can be described as a type of currency that is decentralized and not backed by any government or central authority. This means that the tax treatment of cryptocurrency can be complicated and can differ based on the jurisdiction where you live.
In the United States, the IRS has issued guidance that states that cryptocurrency is considered property to be taxed. That means that transactions that involve crypto are subject to capital gains and losses, just like transactions involving other forms of property.
For instance, if you purchase cryptocurrency and then sell it later for more money then you’ll be able to claim a capital gain that must be declared on your tax return. Conversely, if you sell the cryptocurrency at less than what the amount you paid for it, you’ll be able to claim a capital loss that can be used to offset any other capital gains, or up to $3,000 of ordinary income.
In addition to losses and capital gains You may also be taxed on any cryptocurrency received as payment for services or goods. This income must be reported on your tax return and is subject to the same tax rates as other forms of income.
It’s important to keep in mind that platforms and exchanges where you buy, sell or trade in cryptocurrency must declare certain transactions to IRS and, therefore, the IRS might have information on your cryptocurrency transactions, even when you don’t declare them on your tax return.
It is important to note that the information in this document is for informational only and is not tax, legal and financial guidance. Each person’s financial situation is individual, and you should consult a qualified tax professional before making any decisions regarding your tax situation.
Additionally the laws and regulations regarding cryptocurrency taxes may change over time and can vary depending on your location. It is your duty to ensure that you are in compliance with the laws and regulations in force.
In summary it is regarded as property for tax purposes in the United States, and transactions with cryptocurrency can result in losses or capital gains, and income tax. It is important to consult with an experienced tax professional and keep up to date with the laws and regulations to ensure that you are in compliance.
Disclaimer:
The information provided in this report is intended for informational only and does not constitute legal, financial or tax advice. The information provided in this report is not applicable to all individuals or circumstances. Laws and rules regarding cryptocurrency taxation can change, and could vary depending on your location. It is your responsibility to ensure compliance with all applicable laws and regulations. This document is not intended to replace professional legal or financial advice. You should seek advice from an experienced lawyer or financial advisor prior to making any decisions about your taxes.
The information in this report is intended for informational purposes only and should not be considered financial advice. Each person’s financial situation is particular to them, and it is recommended that you seek the advice of a qualified professional prior to making any decision regarding taxes. The information contained on this page is based upon data available at the time writing and may alter in the future. No guarantee of the exactness or accuracy of this information is made. It is risky to invest in cryptocurrency and you should consult with an advisor in the field of finance prior to investing. Past performance of cryptocurrency does not guarantee the future performance. The information is not intended to serve as a general guide to investing or as a source for any specific investment advice or recommendations. It does not make any explicit or implied recommendations regarding the way in which an individual’s account should be handled, as suitable investment decisions are contingent upon the particular investment goals of the person.