COVID-19 and Crypto Taxes
Virtual currency transactions are taxable by law just like transactions in any other property. Taxpayers transacting in virtual currency may have to report those transactions on their tax returns. The US tax system is voluntary, and it is your responsibility to report all transactions whether the IRS knows about it or not. If you receive a Form 1099-K or Form 1099-B from a crypto exchange, without any doubt, the IRS knows that you have reportable crypto currency transactions. This is thanks to the “matching” mechanism embedded in the IRS Information Reporting Program (IRP). according to the Internal Revenue Service (IRS), digital currencies like bitcoin are considered property for Federal tax purposes. Essentially this means that current property transaction laws apply to transactions using virtual currencies. The US taxpayer is required to report the character of gains or losses from the sale or exchange of a cryptocurrency from the value it was acquired for at the time and for the value of the final sale. Additionally, the IRS treats cryptocurrencies like a ‘convertible virtual currency’ (CVC) which means theoretically if merchants accept a currency like bitcoin the state tax could be applied to both the merchant and customer.
We help you fetch Crypto trades, identify transfers and save you taxes, provide auto-generated documents as needed by your tax authority all work performed by CPA’s. Crypto purchases and sales are subject to Income Tax AND Sales Tax.
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