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Virtual Currency – Real Taxation
By Staff Reporters
What you need to report to the IRS
The IRS treats virtual currencies as property, which means they’re taxed similarly to stocks. If all you did was purchase cryptocurrency with U.S. dollars, and those assets have been sitting untouched in an exchange or your cryptocurrency wallet, you shouldn’t need to worry about reporting to the IRS.
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Reporting is required when certain events come into play, most commonly:
- Trading one cryptocurrency for another.
- Selling cryptocurrency for fiat dollars (government-issued currency).
- Using cryptocurrency to buy goods or services (e.g., paying for a cup of coffee with cryptocurrency).
A critical distinction to make is that triggering a taxable event doesn’t necessarily mean you’ll owe taxes, said Andrew Gordon, an Illinois-based certified public accountant and tax attorney. Just because you have to report a transaction doesn’t mean you’ll end up owing the IRS for it.
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Filed under: Accounting, Glossary Terms, Investing, Taxation | Tagged: Andrew Gordon, crypto, crypto tax, crypto trades, crypto wallet, cryptocurrency, cryptocurrency tax, IRS, virtual currency |
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Crypto Rising
https://www.msn.com/en-us/money/markets/bidens-executive-order-boosts-prospects-for-crypto/ar-AAUWZpW?li=BBnb7Kz
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GEN X
It’s yet more evidence that millennials, now aged 26 to 41, really are the smartest generation ever. Interestingly, Generation Z — meaning those aged 18 to 25 — is way behind on crypto.
Gen Xers are actually more into cryptocurrency than Gen Z. Some 28% of Generation X own crypto and 20% are planning to rely on it for their retirement — an impressive number as Gen Xers are already aged 42 to 57.
Clyde
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Sale of Cryptocurrency
If you are new to trading cryptocurrency you may be wondering what this means for your taxes. Basically, the same rules that apply to property transactions, like the sale of stocks, apply to cryptocurrency. Additionally, how the virtual currency is used also has an impact on how the virtual currency is taxed.
When you sell cryptocurrency you have a taxable event and your gain or loss recognized is calculated as the difference between your cost (the amount spent, including fees, commissions, and other acquisition costs) in the virtual currency and the amount you received in exchange.
Morton
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