How does the IRS classify and tax cryptocurrency transactions?

3 answers

• Dec 29, 2021 · 3 years ago
  The IRS classifies cryptocurrency as property, not currency, for tax purposes. This means that when you buy, sell, or exchange cryptocurrency, it may be subject to capital gains tax. The specific tax rate depends on how long you held the cryptocurrency before the transaction. If you held it for less than a year, it is considered a short-term capital gain and taxed at your ordinary income tax rate. If you held it for more than a year, it is considered a long-term capital gain and taxed at a lower rate. It's important to keep track of your cryptocurrency transactions and report them accurately on your tax return.
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• Dec 29, 2021 · 3 years ago
  Cryptocurrency transactions are subject to the same tax laws as other types of property transactions. This means that if you use cryptocurrency to make a purchase, it may be considered a taxable event and you may need to report the transaction to the IRS. Additionally, if you receive cryptocurrency as payment for goods or services, it is considered income and must be reported on your tax return. It's important to consult with a tax professional to ensure you are following the IRS guidelines and reporting your cryptocurrency transactions correctly.
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• Dec 29, 2021 · 3 years ago
  According to the IRS, cryptocurrency transactions are subject to taxation and must be reported on your tax return. The IRS has been cracking down on cryptocurrency tax evasion and has issued guidelines to help taxpayers understand their obligations. It's important to note that the IRS considers cryptocurrency to be property, not currency, and therefore it is subject to capital gains tax. If you are unsure about how to report your cryptocurrency transactions, it's recommended to consult with a tax professional or use tax software that is specifically designed for cryptocurrency transactions.
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