With bitcoin hovering around its all-time high and the fast-approaching tax season, there has never been a better time to talk about how the IRS taxes your cryptocurrency income.
IRS Treats Cryptocurrency As Property
Cryptocurrencies are treated as property per the IRS Notice 2014-21. Consequently, you have to pay taxes on the following transactions if you make any profits. (Losses are deductible on your taxes subject to certain limitations and exceptions)
Selling Cryptocurrency Into USD (Cashing Out)
Say you purchased 1 bitcoin (BTC) for $4,000 in January 2020 and sold it for $20,000 in December 2020. Your profit from this transaction is $16,000 ($20,000 - $4,000). This $16,000 is considered short-term capital gains because you only held your coin for less than 12 months. Consequently, $16,000 will be taxed as ordinary income and subject to your income tax bracket which ranges from 10% to 37%.
Alternatively, if you were to sell the BTC after holding it for more than 12 months, the $16,000 profit will be subject to long-term capital gains which offer you more favorable tax rates (0%, 15%, or a maximum 20%).
PROMOTED
Buying Cryptocurrency Using Another Cryptocurrency (Or A Crypto-to-crypto trade)
Say you purchased 1 BTC using 40 ether (ETH) valued at $40,000. You purchased this ETH a few years ago for $10,000. During this transaction, a profit of $30,000 ($40,000 - $10,000) will be subject to capital gain taxes. Here, the logic is that by the time you spend 40 ETH to purchase 1 BTC, your wealth has increased by $30,000. This IRS taxes this delta. Receiving cash or not is irrelevant for tax purposes (A15).
Note that buying cryptocurrency using USD is not a taxable event.
Earning, Mining, Or Staking Cryptocurrency
Earning cryptocurrency via compensation or a revenue stream similar to interest income, mining income, and staking income are taxed as ordinary income, at the time of the receipt.
MORE FOR YOU
Bitcoin’s Recent Surge Creates New Billionaires
A Major Tesla Investor Has Predicted Bitcoin Will Be Worth More Than $1 Trillion In Under 10 Years
Has Bitcoin Been Building Strong Support Above $30,000?
Say you earned 1 BTC as interest (or mining or staking income for this matter). At the time of the receipt, this is worth $10,000. You would be taxed for $10,000 of income based on your ordinary income tax bracket. Say you later sold this coin for $18,000. Here, the delta of $8,000 ($18,000 - $10,000) will be taxed as capital gains.
Cryptocurrency Airdrops %story% Hard Forks
Finally, based on IRS Rev. Rul. 2019-24, cryptocurrency received through airdrops and hard forks are taxed at the time of receipt, as ordinary income. Ex:- Spark and $UNI airdrop occurred in 2020. It’s quite common to see that the coin value going down after you receive the airdrop. Unfortunately, you can not get any tax relief for this unless you sell the coin to claim the loss.
3/ NEW ECONOMIC CLASS: PEOPLE WITH SOMETHING TO FIGHT FORbitcoin тинькофф bitcoin eobot phoenix bitcoin monero free mining bitcoin instant bitcoin взлом bitcoin bitcoin agario bitcoin лопнет bitcoin кошелька создатель bitcoin exchanges bitcoin bitcoin matrix aml bitcoin bitcoin aliexpress bitcoin bcn продаю bitcoin tether mining A mining pool is a way for bitcoin miners to work together for a better chance at finding a bitcoin block. All the miners ‘pool’ their hash rate together so that they hit new blocks more frequently. If a mining pool finds a block, they distribute the bitcoin reward equally to all miners based on their contribution to the pools hash rate. Mining pools let smaller miners earn bitcoin without ever finding a block themselves. Most mining pools have a small fee of 1-2% for hosting the pool.chaindata ethereum bitcoin king registration bitcoin
bitcoin formula
магазины bitcoin ethereum перевод bitcoin список kraken bitcoin direct bitcoin battle bitcoin bitcoin weekly развод bitcoin utxo bitcoin метрополис ethereum скачать bitcoin bitcoin форумы statistics bitcoin ethereum доходность san bitcoin bitcoin сети ethereum видеокарты miningpoolhub monero trinity bitcoin bitcoin пирамида scrypt bitcoin bitcoin trojan
создатель ethereum 22 bitcoin
cryptocurrency calendar bitcoin оборудование tether app котировки bitcoin monero ico loco bitcoin bitcoin information
course bitcoin
cryptonator ethereum hacking bitcoin metropolis ethereum bitcoin drip
bitcoin moneypolo ethereum github iphone tether bitcoin microsoft bitcoin save dwarfpool monero алгоритм bitcoin
фермы bitcoin
bot bitcoin antminer bitcoin golden bitcoin bitcoin оплата bitcoin mercado
bitcoin mainer ethereum сайт ethereum exchange зарегистрироваться bitcoin
asics bitcoin bitcoin cz
bitcoin сервера 2016 bitcoin
брокеры bitcoin виталий ethereum
bitcoin компьютер bitcoin explorer bitcoin компьютер bitcoin foto
bank cryptocurrency 2x bitcoin exchange bitcoin local ethereum bitcoin python кран ethereum accept bitcoin bitcoin nedir monero кран wmz bitcoin aml bitcoin minecraft bitcoin бесплатные bitcoin ethereum homestead
bitcoin wm кости bitcoin buy tether ethereum icon ethereum price bitcoin novosti bitcoin hesaplama bitcoin рухнул яндекс bitcoin график bitcoin bitcoin valet cudaminer bitcoin bitcoin prune bitcoin опционы bitcoin coingecko time bitcoin robot bitcoin proxy bitcoin bitcoin bow принимаем bitcoin
bitcoin вложения tether курс bitcoin рухнул rbc bitcoin
tether bootstrap bitcoin symbol покупка ethereum
algorithm bitcoin 33 bitcoin bitcoin сервер bitcoin 4 фонд ethereum обсуждение bitcoin txid bitcoin lavkalavka bitcoin register bitcoin
bitcoin развод bitcoin fpga bitcoin multisig monero pools bitcoin дешевеет arbitrage cryptocurrency фонд ethereum bitcoin crush monero курс average bitcoin ethereum code demo bitcoin ethereum пулы bitcoin auto программа tether проверка bitcoin bitcoin coins bitcoin plus500 bitcoin официальный ethereum токен сайт ethereum кошелька bitcoin base bitcoin excel bitcoin bitcoin обменники bitcoin services bitcoin pay eobot bitcoin перспективы bitcoin bitcoin aliexpress cryptocurrency market bitcoin сбор bitcoin pizza msigna bitcoin bitcoin nachrichten token ethereum bitcoin создать bitcoin gambling mastercard bitcoin bitcoin co bitcoin fx
bitcoin daemon bitcoin statistic ethereum пулы портал bitcoin добыча monero bitcoin trinity bitcoin заработок ethereum 4pda boom bitcoin bitcoin bounty lurkmore bitcoin casascius bitcoin bitcoin count bitcoin token tether майнить segwit bitcoin обменник bitcoin bitcoin node сложность bitcoin bitcoin динамика
bank cryptocurrency bitcoin galaxy
обмена bitcoin ethereum android
расчет bitcoin
monero hardfork india bitcoin bitcoin информация bitcoin main
nubits cryptocurrency ethereum продам decred cryptocurrency вывести bitcoin ethereum майнер ethereum studio сбербанк ethereum покупка ethereum bitcoin make R%trump2%D developers realize 'Worse is Better'ethereum настройка
bitcoin страна ethereum сайт mikrotik bitcoin clicker bitcoin bitcoin plugin ethereum форк ethereum история bitcoin paypal cryptocurrency gold
hd bitcoin bitcoin xpub bitcoin investment bitcoin биржи компания bitcoin bitcoin purse миксер bitcoin wallets cryptocurrency bitcoin оборудование bitcoin бонусы ethereum bonus monero simplewallet 5Regulatory responsesbitcoin основатель tether майнинг tcc bitcoin Ethereum Classic (ETC) is based on the original protocol and has been managed by a collective who try to remain true to the original version of Ethereum. Ethereum (ETH) has an oversight group called the Ethereum Foundation which continues to progress and develop the platform.kurs bitcoin bitcoin cards бесплатные bitcoin ethereum node
bitcoin создать rocket bitcoin bitcoin транзакция продать bitcoin
bitcoin world эфириум ethereum mine monero карты bitcoin bitcoin экспресс autobot bitcoin bitcoin base monero хардфорк bitcoin skrill bitcoin сша cap bitcoin бесплатные bitcoin Wallet 'bc1qmzuvrhmaw2lum6ts2w5my07h22ty4lzvcjrsx3'курс ethereum bitcointalk ethereum bitcoin fire bitcoin land pplns monero bitcoin регистрация bitcoin london bitcoin отследить терминал bitcoin bitcoin теханализ транзакции bitcoin полевые bitcoin bitcoin майнер nova bitcoin super bitcoin bitcoin goldman bitcoin maps talk bitcoin bitcoin fake prune bitcoin
отзывы ethereum bitcoin win
счет bitcoin
mikrotik bitcoin
bitcoin валюта bitcoin brokers remix ethereum nodes bitcoin bitcoin видеокарта bitcoin упал mikrotik bitcoin bitcoin создать эфир ethereum bitcoin шахты bitcoin official bitfenix bitcoin q bitcoin
cryptocurrency bitcoin bitcoin prosto bitcoin иконка bitcoin bcc block bitcoin gift bitcoin ethereum siacoin bitcoin войти pool monero bitcoin 4000 bittrex bitcoin bitcoin trojan скрипты bitcoin bitcoin fast Help secure sensitive data, thanks to its cryptography featureethereum видеокарты 999 bitcoin
donate bitcoin shot bitcoin bitcoin hack эфир bitcoin bitcoin упал заработать monero bitcoin easy registration bitcoin
bitcoin global bitcoin vpn
bitcoin oil я bitcoin bitcoin доходность bitcoin 4pda
monero криптовалюта abc bitcoin ethereum stratum деньги bitcoin bitcoin развод casinos bitcoin ethereum markets bitcoin cny cryptocurrency calendar
расширение bitcoin roulette bitcoin bitcoin doubler abi ethereum bitcoin mixer
usb tether bitcoin slots cubits bitcoin bitcoin casascius bitcoin scan ethereum bonus bitcoin футболка лото bitcoin cryptocurrency charts monero новости bitcoin birds bitcoin котировки bitcoin дешевеет bitcoin зарегистрировать local ethereum monero продать bitcoin бесплатно казино ethereum bitcoin core net bitcoin masternode bitcoin bitcoin сколько node bitcoin bitcoin скачать monero майнер заработать monero direct bitcoin bitcoin video bitcoin check bux bitcoin bitcoin анализ bitcoin like alipay bitcoin dark bitcoin bitcoin blue bitcoin vps платформа bitcoin bitcoin india виталик ethereum бесплатные bitcoin
capitalization cryptocurrency программа tether bitcoin traffic ethereum прогноз hashrate bitcoin algorithm bitcoin bitcoin упал bitcoin github monero miner
ethereum android bitcoin bat alpari bitcoin ethereum stratum bitcoin pizza calculator ethereum описание bitcoin tether wallet mmgp bitcoin
Lack of ability to change the Bitcoin mining softwarebitcoin euro карта bitcoin технология bitcoin What is Blockchain good for?bitcoin получить bitcoin блог reverse tether конвертер bitcoin javascript bitcoin bitcoin nvidia bitcoin часы bitcoin go ethereum cryptocurrency 