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Bitcoins and Cryptocurrencies are Taxable under IRS

Mar 02, 2018 Posted /  6057 Views

Bitcoins and Cryptocurrencies are Taxable under IRS

If you have traded, invested or even bought a cup of coffee with cryptocurrencies, then you are subject to being taxed. Cryptocurrencies are just going to complete ten years of its existence in the market, and it seems like we never thought that something like this could ever happen. But if you own virtual currencies such as Bitcoin, Ethereum, Litecoin with you will be subject to the taxes, even though they are still not regulated by the government.

The IRS (Internal Revenue System) says that cryptocurrency transactions are taxable under the law. So, this apparently means that even if you have made money or lost it, traded or mined bitcoin and possibly bought yourself a home with digital currencies, you will face the potential tax implications and failure to report them could mean possible audits, fines, and penalties.

You might also be little upset once you get to know that many digital coins in which you invested thinking that they are not controlled or regulated by government or any central authority are not actually as off-the-grid as perceived by ordinary people.

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The primary appeal is that they are unconventional and off-beat with more anonymity than the traditional banking.

"There's a very strong sentiment that taxing cryptocurrency is sort of sacrilegious," said Tyson Cross, a tax attorney in Reno, Nevada who specializes in the cryptocurrency discipline. "But most people understand there is a difference between upholding a principle on an anonymous internet forum and going to jail over it."

It is noteworthy that the IRS didn't have had any thoughts of taxing digital currency until 2014. However, in the year 2014, they formulated some guidelines, and so far these remain the same without any changes.

Yes, you owe taxes!`

IRS says that all digital currency transactions are taxable events and this includes selling, trading, mining, paying with virtual currencies. Interestingly, even if you sell cryptocurrency and keep the gains in your exchange account, alternatively of as real cash in checking account, it's still taxable. If you have purchased some bitcoin and holding onto them, then you don't owe any taxes yet. However, you need to make sure if by any time the digital currency's value is realized, you report it to the taxation authorities.

It is quite reasonable- taxation fees depend upon how you use it, and it will be charged accordingly. And, again one more thing, these currencies are not charged as currencies but assets such as property for simplification of taxation laws. So, the same rule applies if you sell Bitcoin or stocks.


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Tags: Bitcoins and Cryptocurrencies Tax

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