The term “cryptocurrency,” also called digital or virtual currency, is a form of decentralized currency which is not backed by any government or central authority. Due to this, the taxation of cryptocurrency is complex and may vary depending on the jurisdiction in which you reside.
Within the United States, the IRS has issued a guidance document that states that cryptocurrency is treated as property to be taxed. The result is that transactions involving cryptocurrency are subject to losses and capital gains as are transactions that involve other forms of property.
If, for instance, you buy cryptocurrency but sell it at a higher price then you’ll be able to claim a capital gain that must be reported in your taxes. Conversely, if you sell the cryptocurrency for a lower price than the amount you paid for it, you’ll have a capital loss that can use to pay off other capital gains, or up to $3,000 of ordinary income.
In addition to losses and capital gains, you may also be taxed on income on any cryptocurrency you receive as payment for goods or services. The income you earn is reported on your tax return and is subject to the same tax rates as other forms of income.
It’s also important to note that the platforms and exchanges that you buy, sell, or trade in cryptocurrency are required to submit certain transactions to the IRS and, therefore, the IRS might have information on your cryptocurrency transactions even if you don’t report them on your tax return.
It is important to note that the information contained in this report is for informational only and is not tax, legal or financial advice. Each individual’s financial situation will be unique, and you should seek advice from a professional before making any decisions about your taxes.
In addition the laws and regulations related to cryptocurrency taxes may change over time and can vary depending on your location. It is your obligation to ensure that you are in that you are in compliance with all applicable laws and regulations.
In short it is regarded as property tax-wise for tax purposes in the United States, and transactions with cryptocurrency can result in capital gains or losses as well as income tax. It is important to consult with an experienced tax professional and keep current with rules and regulations to ensure compliance.
The information contained in this report is for informational only and does not constitute legal, financial or tax advice. The information provided in this report may not be appropriate for all people or scenarios. The laws and regulations surrounding cryptocurrency taxation can change, and can vary depending on your location. It is your responsibility to ensure compliance with all relevant laws and rules. This report is not a substitute for expert financial or legal advice. It is recommended to consult an experienced lawyer or financial advisor prior to making any tax-related decisions.
The information provided in this report is for informational only and is not intended to be considered financial advice. Every individual’s financial situation is unique, and you should consult with a qualified professional before making any decisions regarding your tax situation. The information provided on this page is based upon data available at the time the report’s creation and could be subject to change in the near future. The quality or reliability of information is provided. It is risky to invest in cryptocurrency and you should speak with an expert in financial planning before making a decision to invest. Past performance of cryptocurrency is not a guarantee of future results. The information is not intended to be used as a general guide to investing or to provide any specific investment advice, and makes no implicit or explicit recommendations about how an individual’s account should be handled. The proper investment decisions are based on the particular investment goals of the person.