Crypto currency is now more accessible than at any other time. It has become easily accessible for everyone, and the trading of cryptocurrency has grown significantly in recent years. With that growth, crypto currencies and their trading are now more scrutinized by the IRS. The more that taxpayers integrate cryptocurrency into their finances, the more they must think about its’ tax consequences.
IRS and Cryptocurrency
If you buy cryptocurrency, it is not a taxable event. But if you trade one cryptocurrency for another or use cryptocurrency to buy anything, it is a taxable event. Mining, staking, forks/air drops are also all taxable events, but they are not all treated the same tax-wise. NFTs, while not a cryptocurrency, are also subject to most of the same rules.
Keep in mind that the IRS requires taxpayers to report all income, including crypto. Part of the allure for some crypto owners has been the secretive nature of crypto ownership. The IRS knows this and now requires all taxpayers to specifically state on their tax returns whether or not they had taxable income related to crypto.
Contact us with Further Questions
The buying, selling and investing in cryptocurrency is dynamic and interesting. The tax rules for crypto are evolving and not all tax preparers are comfortable talking about crypto, much less preparing taxes involving them. Call us at Crowley & Company to help you with your cryptocurrency needs.