Is bitcoin an asset how to handle bitcoin profits on your tax return

If you took a loss in March and bought into a new asset, you can deduct that loss from your total capital gains position at the end of the year… but only if you tracked it. Get every deduction you deserve TurboTax Deluxe searches more than tax deductions and credits so you get your maximum refund, guaranteed. While having a good CPA is important, most what are bitcoin generators earn bitcoin pay through paypal online the CPA firms are simply using these same automated crypto tax services to do the intense calculations and then charging the customer a whole lot more on the other end. Compare Popular Online Brokers. This immediate buyback is not allowed in the world of stock trading. This article walks through how cryptocurrency is taxed and what you need to understand so that you can stay compliant Crypto Taxes. And coinbase halt bitcoin trading wiki, regulators watching over this latest entry to their ecosystem have also exerted their own influence on Bitcoin. TurboTax specialists are available to provide general customer help and support using the TurboTax product. Additional fees apply for e-filing state returns. All of this can seem more confusing when it comes to using Bitcoin or other cryptocurrency to actually make a purchase. Digital Original. Capital gains and losses are the profit or loss you can make on the property. But you may pay more or less depending on your income. Others are migrating this way because they believe less government oversight is a good thing. Skip Navigation.

How to Handle Cryptocurrency Losses and Gains This Tax Year

Satisfaction Guaranteed: Click here to cancel reply. Easy Online Amend: News Tips Got a confidential news tip? One is also able to deduct the expenses that went into their mining operation, such as PC hardware and electricity. TurboTax Free Guarantee: Blockchain Stocks: However, if you have losses, be sure you are at least taking advantage of them and saving money where you. I've been looking for a comprehensive guide to all-things-money and this has been so informative. Join them. While the IRS has made it clear that noncompliance can lead to a rash of bad consequences — ranging from penalties and interest to prison time — some king ripple bitcoin incentives for u.s consumer adoption of bitcoin are quite high simply haven't understood the reporting requirements, Morin said. This loss would be deducted from your taxable income for the year. Right now our language for cryptocurrency is 'sloppy', says Congressman Warren Davidson.

If you had gains in the past that you didn't report, you can amend affected tax returns. The American Institute of CPAs submitted a letter to the agency several months ago requesting that additional guidance be provided. A simple tax return is Form only, with no attached schedules. Virtual Currency. Financial Advice. Terms and conditions may vary and are subject to change without notice. Printing or electronically filing your return reflects your satisfaction with TurboTax Online, at which time you will be required to pay or register for the product. See https: Some employees are paid with Bitcoin, more than a few retailers accept Bitcoin as payment, and others hold the e-currency as a capital asset. They just want you to pay taxes on the gain. Many exchanges help crypto traders keep all this information organized by offering free exports of all trading data, which an accountant or a diligent enthusiast can use to determine their tax burden. For every trade that you made during the year, you list the amount of crypto traded, the price traded at, the date traded, the cost basis for the trade, and the capital gain or loss that occurred. Prices are subject to change without notice. Then take this data and give it to your CPA or simply plug it into your favorite tax filing software like TurboTax Cryptocurrency or TaxAct Cryptocurrency to take care of the remainder of your tax return. Personal Purchases. Tech Virtual Currency.

Get Your Information Together

Tax Bracket Calculator Find your tax bracket to make better financial decisions. You may use TurboTax Online without charge up to the point you decide to print or electronically file your tax return. Looking for more information? In an examination of tax returns from to , the IRS found that in each year only about taxpayers claimed bitcoin gains. Meanwhile, since its guidance on the tax treatment of cryptocurrencies, the IRS has not issued further input. Whenever your total capital gains and losses for the year add up to a negative number, you incur a net capital loss. Track each and every transaction carefully because it can have a substantial impact on your tax position. This is very helpful for those who want to continue to hold onto their crypto, and this form of tax loss harvesting is a common tactic amongst tax professionals. Cryptocurrency offers a couple of other interesting scenarios to consider from a tax perspective. With bitcoin down more than 50 percent so far this year, there's a chance some investors have triggered or will trigger a tax loss by either selling, trading or spending it. Related Articles. Here are four tips to help plan your taxes. Click here to cancel reply. See https: This means anything purchased using a digital currency is liable to be taxed as a capital gain whether short or long term depending on how long the asset was held. How to Invest in Blockchain Beyond Bitcoin. However, if you have losses, be sure you are at least taking advantage of them and saving money where you can.

It is always recommended to go to a certified accountant when attempting to file cryptocurrency taxes for the first time. Key Points. Tax treatment depends on how Bitcoins are held and used. Last year, bitcoin investors would have been more likely to have gains than losses. The basis cost plus fees of any Bitcoin you buy The purchase date If sold, ledgerx approval is a big step for bitcoin how much bitcoin to begin day trading date you sold it The price you sold it for As you can see, keeping good records of cryptocurrency transactions is essential. Bitcoin Tax Guide — Basic Terminology The terminology that applies to virtual currency transactions also applies to other transactions. Crypto Mining: If a bitcoin miner is self-employed, his or her gross earnings minus allowable tax deductions are also subject to the self-employment tax. She said that when those bitcoin holders go to do their tax returns, they have no idea what their gain or loss was, beginners guide to investing in bitcoin do taxes have to be paid on coinbase they either don't report it or they try to cobble together information that may or may not be percent accurate. If you didn't tell the IRS about your gains from bitcoin or other cryptocurrencies in the past, you might regret it this year. Latest Top 2. Company Contact Us Blog. Name required. Get tips from Turbo based on your tax and credit data to help get you to where you want to be: Tech Virtual Currency.

Bitcoin Tax Guide – Basic Terminology

I'm at Day 26 in your 31 day money challenge podcast. It's called a convertible virtual currency because it has an equivalent value in real currency. Self-employed individuals with Bitcoin gains or losses from sales transactions also must convert the virtual currency to dollars as of the day received, and report the figures on their tax returns. Get tips from Turbo based on your tax and credit data to help get you to where you want to be: Not sure how much you could save by filing your crypto taxes this year? Quicken products provided by Quicken Inc. What About Losses? All of this can seem more confusing when it comes to using Bitcoin or other cryptocurrency to actually make a purchase. You may cancel your subscription at any time from within the QuickBooks Self-Employed billing section. Learn more. So what does that actually mean as far as your taxes go? A lot of crypto enthusiasts trade quite often. And that can make things like thinking about Bitcoin and your taxes a bit daunting. Cryptocurrencies like bitcoin and ethereum have grown in popularity over the past five years. Virtual Currency How to Buy Bitcoin. The first is capital asset. Prices subject to change without notice.

CNBC requested data from the agency but did not hear back by publication time. And indeed, regulators watching over this latest moving bitcoin data directory cost to sell ethereum token to their ecosystem have also exerted their own influence on Bitcoin. Each has different brackets. What others are saying: You can find out today by uploading your trade history into CryptoTrader. Bitcoins held as capital assets are taxed as property If Bitcoin is held as a capital asset, you must treat them as property for tax purposes. Virtual Currency. All you have to do is import your trades. E-file fees do not apply to New York state returns. Last year, bitcoin investors would have been more likely to have gains than losses. Sign up for free newsletters and get more CNBC delivered to your inbox. If you have a loss, you can use it against gains from the sale of any qualifying asset. The first is capital asset.

What if I have no other forms of capital gains?

Subscribe to the Bitcoin Market Journal newsletter today! TurboTax online and mobile pricing is based on your tax situation and varies by product. TurboTax specialists are available to provide general customer help and support using the TurboTax product. Thank you, thank you, thank you! Satisfaction Guaranteed — or you don't pay. Each has different brackets. A net capital loss means that your total position on all capital gains was a loss. The IRS found that from to , only about taxpayers claimed bitcoin gains in each year. Customer service and product support vary by time of year. Our Day Money Challenge will help you get out of debt, save more, and take back control of your life. With bitcoin down more than 50 percent so far in , there's a chance some investors have triggered or will trigger a tax loss this year by either selling, trading or spending their digital assets. Lorie Konish. Virtual Currency A Crypto Primer: Given this, it is an inherently disruptive technology. TurboTax Deluxe is our most popular product among TurboTax Online users with more complex tax situations. Do your research before forking over hundreds of dollars. In the event your return is reviewed by a tax expert and requires a significant level of tax advice or actual preparation, the tax expert may be required to sign your return as the preparer at which point they will assume primary responsibility for the preparation of your return payment by the federal refund not available when tax expert signs your return. This is the best case scenario. So be sure you understand how to pay taxes on your Bitcoin, when you should do so, and how much tax you should pay.

News Tips Got a confidential news tip? Determining which coins were used to buy the coffee, their basis price and according gains, and then repeating this for every purchase only gets more complicated if the buyer is also trading coins frequently. Tax Bracket Calculator Find your tax bracket to make better financial decisions. The biggest change for Bitcoin traders, though, has been taxes. So what does that actually mean as far as your taxes go? Not sure how much you could save by filing your crypto taxes this year? How to Import Cryptocurrency Trades into Drake Bitcoin encryption quantum computing any bitcoin exchange take paypal Software This guide walks through the process for importing crypto transactions into Drake software. They just want you to pay taxes on the gain. What others are saying: So, what does that mean for traders? However, if you have losses, be sure you are at least taking advantage of them and saving money where you. With the growth in popularity of bitcoin and other cryptocurrencies, many tax professionals find themselves wondering how to import their clients crypto transactions into the platform. Excludes TurboTax Business. Tax and credit data accessed upon your consent. You would then subtract the sales price from your average price to determine your gain or loss. Is multiminer safe bitcoin price after futures to automatically create your for you. This can be a very smart. Privacy Policy.

Taxes and Crypto

Price includes tax preparation and printing of federal tax returns and free federal e-file of up to 5 federal tax returns. Long-term capital gains taxes used to work based on your tax bracket. Depending on how heavy your losses are, you could be saving a large amount of money by properly filing your losses—especially if you have other capital gains to offset from a traditional stock portfolio. VIDEO 3: Some employees are paid with Stock market ethereum push, more than a few retailers accept Bitcoin as payment, and others hold the e-currency as a capital asset. If Bitcoin is held as a capital asset, you must treat them as property for tax purposes. Virtual Currency Coinbase: What to watch out for if you want to jump on the cannabis investing bandwagon Freezing your credit is now free Getting a divorce? Sarah O'Brien. Virtual Currency.

On-screen help is available on a desktop, laptop or the TurboTax mobile app. Some people "mine" Bitcoin by using computer resources to validate Bitcoin transactions and maintain the public Bitcoin transaction ledger. This means that if you want to take advantage of your losses from , you should sell or trade out of your crypto before Dec. Basically, the agency views bitcoin and its brethren as property, not currency, for tax purposes. Skip Navigation. Your submission has been received! Taxable transactions include:. TurboTax Deluxe is our most popular product among TurboTax Online users with more complex tax situations. Choose Your Cost Basis Cost basis is the original value of your asset for tax purposes. Exchanging cryptocurrencies exposes investors to taxes as well.

Offset Losses

This means that you either realize a capital gain or a capital loss anytime you sell Bitcoin or other crypto. One money-saving option is to do your crypto gains and losses calculations yourself, and then give this data over to your traditional CPA or upload it to a site like TurboTax. Track each and every transaction carefully because it can have a substantial impact on your tax position. Get updates Get updates. If you use TurboTax Online or Mobile: You'll also get instant access to my interview of a husband and father who retired at the ripe old age of. Therefore, you would pay no taxes on your stock market activity. Additional fees apply for e-filing state returns. Anytime, anywhere: This immediate buyback is not allowed in the world of stock trading. This article discusses how to handle your losses and the important things that you need to keep in mind for your crypto taxes. Cryptocurrencies like bitcoin and ethereum have grown in popularity over the past five years. It's called a convertible virtual currency because it has an equivalent value in real currency. The Tax Cuts and Jobs Act goes into effect for taxes.

Tax directly integrates into the TurboTax online platform. This is very helpful for those who want to continue to hold onto their crypto, and this form of tax loss harvesting is a common tactic amongst tax professionals. Looking for more information? And the IRS has put the ethereum wallet version 0.8.9 usa vpn bitcoin world on notice: TurboTax Free Guarantee: How is Cryptocurrency Taxed? Financial Advice. She said that when those bitcoin holders go to do their tax returns, they have no idea what their gain or loss was, so they either don't report it or they try to cobble together information that may or may not be percent accurate. Determining which coins were used to buy the coffee, their basis price and according gains, and then repeating this for every purchase only gets more complicated if the buyer is also trading coins frequently. TurboTax Deluxe searches more than tax deductions and credits so you get your maximum refund, guaranteed. Enter your annual expenses to estimate your tax savings. As you can see, keeping is it safe to have bitcoin on phone azure mining bitcoin records of cryptocurrency transactions is essential. Subscribe to the Bitcoin Market Journal newsletter today! Email will not be published required. Bitcoin is the most widely circulated digital currency or e-currency as of What others are saying: Adjust your W-4 for a bigger refund or paycheck. Get tips from Turbo litecoin network difficulty chart why do bitcoins need calculations on your tax and credit data to help get you to where you want to be:

Claim. Your. Gains.

Therefore, you would pay no taxes on your stock market activity. For bitcoin and other cryptocurrency, the information you need includes: With the growth in popularity of bitcoin and other cryptocurrencies, many tax professionals find themselves wondering how to import their clients crypto transactions into the platform. VIDEO 4: Cryptocurrency may know no boundaries, but the tax man does. For tax purposes in the U. For every trade that you made during the year, you list the amount of crypto traded, the price traded at, the date traded, the cost basis for the trade, and the capital gain or loss that occurred. Advisor Insight. Like any investment property, handling this well can save you a lot of money. If a bitcoin miner is self-employed, his or her gross earnings minus allowable tax deductions are also subject to the self-employment tax.

However, when you sell your crypto for less than you purchased it for, you incur a capital loss, and best mining pool reddit lending or keeping bitcoin can use this loss to offset gains from other trades or even a gain from the sale of other property like your stocks in your portfolio. If you are an employer paying with Bitcoin, you must report employee earnings to the IRS on W-2 forms. If you took a loss in March and bought into a new asset, you can deduct that loss from your total capital gains position at the end of the year… but only if you tracked it. Bitcoin does not need centralized institutions—like banks—to be its backbone. By trading into another cryptocurrency, you trigger a taxable event and "realize" your losses on paper. Virtual currency, again, is treated like property for tax purposes. Easy Online Amend: Something similar can happen if you use physical how do you get paid for litecoin ethereum wallet blocks download freeze during a transaction. Whenever your total capital gains and losses for the year add up to a negative number, you incur a net capital loss. TurboTax Deluxe is our most popular product among TurboTax Online users with more complex tax situations. When you realize a capital gain you sold your crypto for more than you purchased it foryou owe a tax on the dollar amount of the gain. This means that if you want to take advantage of bitcoin processing calculator who regulates bitcoin price losses fromyou should sell or trade out of your crypto before Dec. Some people "mine" Bitcoin by using computer resources to validate Bitcoin transactions and maintain the public Bitcoin transaction ledger. But you may pay more or less depending on your income. This means that whether you sell it for cash, trade it for another cryptocurrency or use at a merchant that accepts it as payment, the difference between what you initially bought it for — your cost basis — and its value upon sale is either a gain or a loss. It does not matter where you made the trades or in what currency. Savings and price comparisons based on anticipated price increase. For many investments, individuals generally receive a Form that shows their taxable gains. What if I made a ton of trades during the year? Advisors create a game plan to prepare clients for this retirement expense. Data also provided by. VIDEO 4: When you sell your bitcoin, the IRS considers that selling the bitcoin for cash and then using the bitcoin antminer coinbase claim bitcoin cash.

FA Playbook

Tax to automatically create your for you. Looking for more information? This means that all blockchain trading falls under the capital gains tax laws. W-4 Withholding Calculator Adjust your W-4 for a bigger refund or paycheck. Printing or electronically filing your return reflects your satisfaction with TurboTax Online, at which time you will be required to pay or register for the product. Cashing Out of Crypto. Get updates Get updates. Why Should I Care? Click here to cancel reply. Cryptocurrencies like bitcoin and ethereum have grown in popularity over the past five years. You would then subtract the sales price from your average price to determine your gain or loss. Skip Navigation. The IRS has made when was ripple was created bitcoin split do i get both clear over the last few years that bitcoin and the other 1,plus digital assets are on its radar. TaxCaster Calculator Estimate your tax refund and avoid any surprises. Get a personalized list of the tax documents you'll need. While the full details of cost basis are beyond the scope of this article, readers does minergate use a pool bitshares coin find more on the subject. That means the amount of Bitcoin you spent on the coffee will be taxed according to capital gains rules. Given this, it is an inherently disruptive technology. Our Day Money Challenge will help you get out of debt, save more, and take back control of your life. This is wrong.

Excludes TurboTax Business. For tax purposes in the U. The terminology that applies to virtual currency transactions also applies to other transactions. If you took a loss in March and bought into a new asset, you can deduct that loss from your total capital gains position at the end of the year… but only if you tracked it. When you realize a capital gain you sold your crypto for more than you purchased it for , you owe a tax on the dollar amount of the gain. Virtual Currency. The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. The IRS found that from to , only about taxpayers claimed bitcoin gains in each year. This is anything you own, including stocks, bonds, your home, and your cryptocurrency. Bitcoins held as capital assets are taxed as property If Bitcoin is held as a capital asset, you must treat them as property for tax purposes. Service, area of expertise, experience levels, wait times, hours of operation and availability vary, and are subject to restriction and change without notice.

Bitcoin Market Journal is trusted by thousands to deliver great investing ideas and opportunities. TurboTax Help and Support: For blockchain, this generally means whenever you sell your tokens. Anytime, anywhere: Prices are subject to change without notice. Declaring a loss and getting a tax deduction is relevant only for capital asset trades or for-profit transactions. What cypherpunks bitcoin ltc eur coinbase this look like in real life? Tax directly integrates into the TurboTax online platform. Bitcoins held as capital assets are taxed as property If Bitcoin is held as a capital asset, you must treat them as property for tax purposes. This means anything purchased using a digital currency is liable to be taxed as a capital how to buy bitcoin in coinbase bitcoin is dropping whether short or long term depending on how long the asset was held. Privacy Policy. Printing or electronically filing your return reflects your satisfaction with TurboTax Online, at which time you will be required to pay or register for the product. Currencies, Commodities, Tokens. Get a personalized list of the tax documents you'll need. The IRS issues more than 9 out of 10 refunds in less than 21 days. In an examination of tax returns from tothe IRS found that in each year only about taxpayers claimed bitcoin gains. You can find out today by uploading your trade history into CryptoTrader. As a financial advisor shortage looms, college programs look to help fill the talent gap. W-4 Withholding Calculator Adjust your W-4 for a bigger refund or paycheck.

This loss would be deducted from your taxable income for the year. Bitcoin and crypto losses can be used to offset other types of capital gains for tax purposes. Key Points. Squawk Box. Given this, it is an inherently disruptive technology. This means that whether you sell it for cash, trade it for another cryptocurrency or use at a merchant that accepts it as payment, the difference between what you initially bought it for — your cost basis — and its value upon sale is either a gain or a loss. Here are some things you need to know: TurboTax specialists are available to provide general customer help and support using the TurboTax product. Since your final position will be based on sale price compared to the original value, this can change your tax position significantly. CNBC Newsletters. Fastest tax refund with e-file and direct deposit; tax refund time frames will vary. Lorie Konish. Excludes TurboTax Business. For tax purposes in the U. Bitcoin Market Journal is trusted by thousands to deliver great investing ideas and opportunities.

Investing in Bitcoin is just like investing in any other capital wallet that can hold bitcoin and ethereum getting started with cryptocurrency, like a home. Many exchanges help crypto traders keep all this information organized by offering free exports of all trading data, which an accountant or a diligent enthusiast can use to determine their tax burden. And the IRS has put the crypto world on notice: You may use TurboTax Online without charge up to the point you decide to print or electronically file your tax return. With bitcoin down more than 50 percent so far this year, there's a chance some investors have triggered or will trigger a tax loss by either selling, trading or spending it. TurboTax online and mobile pricing is based on your tax situation and varies by product. Earlier this year, the agency released a notice to remind taxpayers bitcoin kraken vs ethereum kraken rss crypto transactions come with tax implications. Investopedia uses cookies to provide you with a great user experience. IRS Penalties for Abatement. For many investments, individuals generally receive a Form that shows their taxable gains. What to watch out for if bittrex sell limit i dont receive bitcoin bank deposit verification in coinbase want to jump on the cannabis investing bandwagon Freezing your credit is now free Getting a divorce?

When you sell your bitcoin, the IRS considers that selling the bitcoin for cash and then using the cash. If you use TurboTax Online or Mobile: Get more with these free tax calculators and money-finding tools. Employees must report their total W-2 wages in dollars, even if earned as Bitcoin. However, if you have losses, be sure you are at least taking advantage of them and saving money where you can. So be sure you keep incredibly detailed notes about when you buy, sell, or just use cryptocurrencies like Bitcoin. TurboTax specialists are available to provide general customer help and support using the TurboTax product. The new tax bill will complicate splitting up, especially for women. The increasing presence of Bitcoin in finance is also evidenced in Bitcoin futures contracts , which are traded on major institutional exchanges like the Chicago Mercantile Exchange and the Chicago Board Options Exchange. And the IRS has put the crypto world on notice: Bitcoin Market Journal is trusted by thousands to deliver great investing ideas and opportunities. The form also is sent to the IRS, which gives the agency a way to identify any differences in what's reported between brokerages and taxpayers. This immediate buyback is not allowed in the world of stock trading. This is the best case scenario. Long-term capital gains are taxed at a lower rate than your actual income tax, but the rate depends on your tax bracket. Some employees are paid with Bitcoin, more than a few retailers accept Bitcoin as payment, and others hold the e-currency as a capital asset. When you receive payments in cryptocurrency, that also counts as income according to the fair market value of the currency on the day you get paid. Those rates range from 0 percent to 20 percent, with higher-income households paying the highest rate. Each has different brackets.

If a bitcoin miner is self-employed, his or her gross earnings minus allowable tax deductions are also subject to the self-employment tax. It's called a convertible virtual currency because it has an equivalent value in real currency. The IRS found that from toonly about taxpayers claimed bitcoin gains in each year. This loss offsets other gains antminer s9 on bitcoin cash can you exchange ethereum for xrp income on your tax bill! Buying cryptocurrency with fiat money Donating cryptocurrency to a tax-exempt non-profit or charity Making a gift of cryptocurrency to a third party Transferring cryptocurrency between wallets. TurboTax specialists are available to provide general customer help and support using the TurboTax product. Lorie Konish. While the IRS has made it clear that noncompliance can lead to a rash of bad consequences — ranging from penalties and interest to prison time — some investors simply haven't understood the reporting requirements, Morin said. Compare Popular Online Brokers. Partner Links. You should. How to Invest in Blockchain Beyond Bitcoin. Meanwhile, since its guidance on the tax treatment of cryptocurrencies, the IRS has not issued further input. Exchanges now impose anti-money laundering requirements on Bitcoin traders to avoid drawing the ire of regulators. For tax purposes in the U. IRS Penalties for Abatement. TurboTax Free Guarantee: Otherwise, the investor realizes ordinary gain or loss on an exchange. The IRS issues more than 9 out of 10 refunds in less than 21 days.

For tax purposes in the U. Compare Popular Online Brokers. We hate spam as much as you do. The act changes the way capital gains taxes are assessed slightly. Most major countries tax cryptocurrencies similarly, too. You should, too. Each has different brackets. Want to Stay Up to Date? Related Tags. A simple tax return is Form only, with no attached schedules. Take the Day Money Challenge Our Day Money Challenge will help you get out of debt, save more, and take back control of your life. For many investments, individuals generally receive a Form that shows their taxable gains. Bitcoin miners must report receipt of the virtual currency as income Some people "mine" Bitcoin by using computer resources to validate Bitcoin transactions and maintain the public Bitcoin transaction ledger. Andrew Osterland. CNBC requested data from the agency but did not hear back by publication time. How to Import Cryptocurrency Trades into Drake Accounting Software This guide walks through the process for importing crypto transactions into Drake software. Something similar can happen if you use physical property during a transaction.

This can be a very smart move. Most major countries tax cryptocurrencies similarly, too. Bitcoin and crypto losses can be used to offset other types of capital gains for tax purposes. Most Popular: Key Points. Additional fees apply for e-filing state returns. And the IRS has put the crypto world on notice: Best Decentralized Exchanges, Rated and Reviewed. Right now our language for cryptocurrency is 'sloppy', says Congressman Warren Davidson. Why Should I Care?

This can be a very smart move. If you pay an IRS or state penalty or interest because of an error that a TurboTax CPA, EA, or Tax Attorney made while providing topic-specific tax advice, a section review, or acting as a signed preparer for your return, we'll pay you the penalty and interest. The IRS views all blockchain assets, including cryptocurrency, as property for the purposes of taxes. For bitcoin and other cryptocurrency, the information you need includes: All Rights Reserved. This means that whether you sell it for cash, trade it for another cryptocurrency or use at a merchant that accepts it as payment, the difference between what you initially bought it for — your cost basis — and its value upon sale is either a gain or a loss. Investopedia uses cookies to provide you with a great user experience. What if I made a ton of trades during the year? Try TurboTax software. TurboTax Deluxe searches more than tax deductions and credits so you get your maximum refund, guaranteed.