![]() ![]() Much like buying stocks and bonds and holding them in your investment account, you don’t need to report this information to the IRS on your tax return if it isn’t accompanied by a subsequent sale or exchange. If you only purchased crypto during the tax year but made no other transactions with it, you won’t need to report this activity. If you do receive a Form 1099 from your broker or exchange, and the information presented is incorrect, you should provide the correct details on your tax return through Schedule D and Form 8949. Your broker or exchange may not provide you with a Form 1099 reporting this activity, but you’re still obligated to report it. The IRS chose to step up enforcement of taxes on crypto by placing a question at the top of Form 1040 asking, “At any time during 2022, did you receive, sell, send, exchange or otherwise acquire any financial interest in any virtual currency?”īy adding this simple question, the IRS has removed any doubt about whether cryptocurrency activity is taxable. Likewise, if you’ve earned crypto for work you’ve performed or as a promotion tied to activities such as staking, these transactions are taxable as ordinary income. If you sell or exchange crypto (including one crypto for another), this creates a taxable event that you’ll need to report on your tax return as a capital gain or loss. Crypto Tax Myth #1: Crypto Isn’t TaxableĬrypto activity is taxable and needs to be reported to the IRS in most situations. If you earned crypto working as a freelancer, independent contractor or gig worker and were paid in cryptocurrency or for crypto-related activities, then you may need to report this on Schedule C and pay taxes on your crypto earnings.īelow, we cover some popular cryptocurrency tax myths and clear several misconceptions people might have. If you sold or exchanged crypto during the tax year, you’ll likely need to report this activity on Form 1040 Schedule D and Form 8949 if necessary. This means if you traded crypto in a taxable account or you earned income from activities such as staking or mining, you have taxable events to report on your return. The IRS ruled that cryptocurrencies are “property” in IRS Notice 2014-21, giving virtual currencies the same treatment as stocks, bonds or gold. Depending on the type of activity, you'll report your crypto gains and losses on Form 1040 Schedule D, or crypto income either on Form 1040 Schedule C for self-employment earnings or Form 1040 Line 1 as employment wages.Other actions that may generate a taxable event include crypto mining, airdrops, staking rewards, and crypto-to-crypto swaps (including non-fungible tokens, or NFTs).You can also trigger tax liability for crypto activity by earning it as income or using it as currency for your purchases.The IRS treats cryptocurrency as “property.” If you buy, sell or exchange this virtual currency, you’re likely going to need to pay crypto taxes.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |