Unless you’ve been living in isolation for the last year or so, it’s surely impossible for you to have not heard about bitcoin and cryptocurrency. Cryptocurrency is very much the topic of the day at this moment in time, but what about cryptocurrency taxation? Well, that’s where things get tricky for everyday individuals, business owners, and investors alike. You see, although the premise of cryptocurrency has been around for decades, it is only now that more of an interest in it is being shown, which is why people are looking to purchase experts offering tax help, to help them deal with cryptocurrency taxation. To help make your tax problem that little bit easier, we will shortly be looking at several things to know in regards to cryptocurrency taxation, to ensure you know what is required to get your taxes in order. Take a look at the following, familiarize yourself with as many of the facts as you can, and we will then go from there.
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Bitcoins are taxable – Years ago, there was a huge deal of hype surrounding the mining of Bitcoins – arguably the most popular form of cryptocurrency, and subsequently people worldwide invested thousands in state of the art computer mining technology to help them ‘mine’ Bitcoins online. If you yourself have managed to mine Bitcoins and now plan on selling them, one clear cryptocurrency taxation law states that you will owe taxes on any Bitcoins that you sell on. Also see our FAQs on cryptos taxation.
Cryptocurrency is treated as property – When it comes to tax help in regards to cryptocurrency taxation, another thing you need to know is that cryptocurrency is treated as a form of property for taxation purposes. This means that, just like in the case of bonds, gold, investment properties, and stocks, it is considered a capital asset rather than like a form of currency such as the dollar. Just because of this however, it is important to remember that not every individual rule which applies to real estate or stocks, will apply to cryptocurrency.
Always seek help from taxation experts – The world of cryptocurrency taxation can be confusing, even for some pros, which is why you should speak to seasoned experts for help and advice. Taxation experts deal with issues such as payroll tax help and tax audit issues every single day, so it’s safe to say that they know what they’re talking about. If you are in possession of cryptocurrency, or are maybe thinking of investing in Bitcoin, seeking tax help from experts is considered a must.
You generally won’t owe taxes when moving the same Bitcoin from one wallet to the next – Bitcoins are stored online in what is known as a ‘wallet’. If you move one Bitcoin from one wallet to the next, you do not owe taxes on it. However, you still need to account for this action. As you can see, the world of cryptocurrency taxation is pretty complex, but you should never cut corners when it comes to your taxes, because once the taxman has his sights set on you, you can rest assured that one way or another, he will catch up with you.
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Disputes will arise from trading Cryptocurrencies and other virtual currencies, and having a tax expert by your side could even the odds if challenged by the IRS or the state. We represent US taxpayers worldwide. Schedule your consultation today at 1-562-204-6700.
About Mike Habib, EAI own and manage a boutique tax representation firm, we represent taxpayers before the IRS and state tax agencies in various tax controversy matters.
Schedule your consultation today at 1-562-204-6700.