Jasz
VIP Contributor
In the United States, bitcoin investors and traders are required to report their bitcoin transactions on their tax returns, just as they would report any transactions conducted in dollars or other national currencies. I read this some time ago and it's looking weird somehow. Have you read or experienced this?
There are three types of bitcoin transactions that may be subject to taxation:
Ordinary exchanges of bitcoins for goods and services: For example, if you buy a sandwich with bitcoins, you are exchanging bitcoins for the sandwich, and this transaction is taxed as an ordinary purchase.
Exchanges of national currency for bitcoins: If you exchange $10 for 0.1 bitcoins, this is a taxable event. You have exchanged the U.S. dollar equivalent of $10 for 0.1 bitcoins. You need to report this transaction on your tax return and calculate the capital gain or loss from the exchange. If you use the cost basis method for calculating your capital gains or losses on your crypto trades, then you will need to keep track of when and how much you paid for each coin or token that you purchase. If you used the first-in-first-out (FIFO) method it means that any coins or tokens sold will be treated as if they were the first ones purchased – so it doesn’t matter which ones you actually sell.
However, If you give Bitcoin to a friend or family member as a gift, you do not have to pay taxes on it. (You also don't need to report that transaction.)
If you use Bitcoin for personal expenses (such as buying your weekly groceries), then those transactions are not considered taxable events.
What do you think?
There are three types of bitcoin transactions that may be subject to taxation:
Ordinary exchanges of bitcoins for goods and services: For example, if you buy a sandwich with bitcoins, you are exchanging bitcoins for the sandwich, and this transaction is taxed as an ordinary purchase.
Exchanges of national currency for bitcoins: If you exchange $10 for 0.1 bitcoins, this is a taxable event. You have exchanged the U.S. dollar equivalent of $10 for 0.1 bitcoins. You need to report this transaction on your tax return and calculate the capital gain or loss from the exchange. If you use the cost basis method for calculating your capital gains or losses on your crypto trades, then you will need to keep track of when and how much you paid for each coin or token that you purchase. If you used the first-in-first-out (FIFO) method it means that any coins or tokens sold will be treated as if they were the first ones purchased – so it doesn’t matter which ones you actually sell.
However, If you give Bitcoin to a friend or family member as a gift, you do not have to pay taxes on it. (You also don't need to report that transaction.)
If you use Bitcoin for personal expenses (such as buying your weekly groceries), then those transactions are not considered taxable events.
What do you think?
