By Abigail Perry
Crypto is still a relatively new investment opportunity, and there are still many unanswered questions about how it fits into our tax laws. Well, the bad news for crypto investors: it is taxable. Despite being a digital asset, the IRS considers cryptocurrency holdings ‘property’. This means they treat it in the same way as other assets.
At the beginning of the new tax season, prepare yourself for the year ahead. And it’s important you do because it’s down to the taxpayer to record their crypto transactions.
What Is Taxable?
If you sell crypto assets for dollars, trade for other crypto assets, or use them to purchase anything (digital or real-world), you must report your gains and losses on your tax return. If you earn any cryptocurrency through mining or compensation, you must note it—it’s treated with income tax rates.
Essentially, any trading or selling of crypto is taxable. Every single time you trade crypto, it’s a taxable event. For example, if you trade Bitcoin for Ethereum, you must report it on your tax return.
What Is Not Taxable?
There is some good news for crypto investors. You don’t have to pay tax if you earn no interest on your assets through staking—locking up your cryptocurrency on a digital platform. Moreover, receiving cryptocurrency as a gift or transferring between wallets is non-taxable and non-reportable. Purchasing cryptocurrency with US dollars is also non-taxable.
Unclear Crypto Taxation Laws
While in the UK, HMRC is now taking a greater interest in crypto transactions and the tax implications, the IRS hasn’t wholly solidified its taxation laws surrounding …
Full story available on Benzinga.com