Bitcoin and Taxes Explained



Bitcoin has been around for about 8 years, and in that time it’s made quite an impact on our society. But with any new and innovative technology, it comes with questions of its own. One big question is whether or not using Bitcoin is legal, meaning if you can be penalized by government agencies like the IRS if you use it in your transactions? This article will go over some basic information on using Bitcoin as well as how it can affect your taxes if you have to pay them at all!

Q1: What are cryptocurrency taxes?

A quick reminder that cryptocurrency is still considered property in most jurisdictions, not a currency. This means you must pay capital gains tax on any profit from cryptocurrency transactions. The law can vary by country (for example, China currently bans trading cryptocurrencies), so it’s a good idea to check up on your local rules before you start mining. Do note that most countries will require you to pay taxes for transactions made at home too, even if you haven’t converted those profits into fiat currency yet.


Q2: How do I pay cryptocurrency taxes?

Are you using virtual currencies to hide income from the taxman? Or is that fancy-sounding altcoin simply a hobby? Either way, Uncle Sam expects his cut. While bitcoin taxes aren’t exactly straightforward—many government agencies haven’t published comprehensive cryptocurrency taxation rules yet—there are still ways to abide by IRS guidelines. Here’s what you need to know about paying taxes on cryptocurrencies in 2018.


Q3: How do I get paid in cryptocurrency without paying taxes?

The third way to use Bitcoin without getting audited by tax authorities is to not use it at all. This seems counterintuitive, but there are ways to avoid paying capital gains taxes on your cryptocurrency transactions. The best method will depend on your personal tax situation, so make sure you read up on that before deciding how to get paid in Bitcoin while minimizing your tax exposure.


Q4: Do I have to pay capital gains taxes on cryptocurrency?

Bitcoin has enjoyed a tremendous year in 2017, climbing from under $1,000 at its start to almost $20,000 by December. The recent boom in cryptocurrency values is likely to make traders think twice about how their digital assets are taxed. Here’s everything you need to know about taxes on cryptocurrencies like Bitcoin.


The Future of Cryptocurrency

Bitcoin has been around for over a decade, but it caught on as a widespread digital currency only recently. It may be hard to believe that cryptocurrency is here to stay; after all, digital money is still very new. However, if Bitcoin has taught us anything, it’s that change can happen quickly—and we should expect even more disruptive technology on the horizon.