Cryptocurrency tax is a complicated subject, but understanding the basic rules is important for crypto investors. This comprehensive guide examines how major countries tax Bitcoin, Ethereum, and other cryptocurrencies.
How Bitcoin and other cryptocurrencies are taxed in the US.
In the United States, Bitcoin and other cryptocurrencies are taxed by the IRS as capital assets or property rather than as cash. This means that:
Selling or selling crypto for profit triggers capital gains tax. The tax depends on how long you hold the crypto. Short-term gains of less than one year are taxed as regular income. Long-term gains on crypto held for more than a year are generally taxed at the lower rate of long-term capital gains.
Crypto mining, gambling, and crypto derived from windfalls or hard matches are considered taxable income. The proceeds must be valued at fair market value.
The use of cryptocurrency to purchase goods and services creates a taxable event. You have to calculate capital gains or losses in using crypto.
Trades from crypto to crypto are taxable events. Income tax applies to the sale of one stock and the purchase of another.
Gift gifts over $15,000 may be taxable.
Tax reporting for US. crypto investors
Capital gains and losses must be reported on IRS Form 8949. This is attached to your Schedule D .
Crypto income from mining or staking must be reported as miscellaneous amounts on Form 1040 .
Keep detailed records of your cost base, collection dates, and selling prices to accurately calculate profit and loss.
Cryptocurrency tax software can help track your transactions on wallets and exchanges.
How is cryptocurrency taxed in other major countries.