Are you grappling with your cryptocurrency taxes? We’re here to help.
Must I Pay Capital Gains On Cryptocurrency Trades and Purchases?
Since consumers can covert cryptocurrencies into cash, the IRS considers them assets subject to capital gains. In other words: If you buy and sell Bitcoin, Ether, or other digital tokens for investment purposes, you’re required to pay taxes on any accrued gains.
Cryptocurrency Gains: Valuation Calculations
Much like other capital assets, cryptocurrency tax rates depend on how long you hold the asset before cashing out, plus buy and sell valuations. That said, like traditional investments, cryptocurrency losses can be claimed (up to $3,000) against capital gains.
The IRS doesn’t tax Cryptocurrency assets until they’re sold, which triggers a loss or gain. For example, if you bought Bitcoin at $11k and sold it for $12k, you would earn $1K. If you trade cryptocurrency or use it to purchase goods or services, the same principles apply.
Cryptocurrency Gains: Must Token Exchanges Produce 1099s?
The IRS doesn’t hold 3rd party crypto exchanges to traditional reporting requirements. Specifically, exchanges aren’t required to issue 1099 forms, unlike other U.S. brokers. As such, token traders and investors must keep track of their actions.
It’s never a bad idea to consult with a Certified Public Accountant (CPA) well-versed in cryptocurrency matters — especially if you’ve sold or used tokens in the past year.
Connect With A Cryptocurrency Tax Consultant
Gordon Law Group’s cryptocurrency tax team has the background and knowledge you need to make the best tax moves. We’ll examine your situation — from top to bottom — and develop a comprehensive tax position that takes advantages of as many deductions, credits, and donations as possible — which ultimately saves you money.
Let’s get started! We’re ready to tackle your cryptocurrency gains and tax matters.Contact A Cryptocurrency Tax Attorney »