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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 | 2 Comments »
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