selling bitcoin taxes | BTCC Knowledge

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How much is bitcoin taxed?

It's a long-term gain taxed at a rate of either 0%, 15%, 20%, depending on your overall income, if you owned the Bitcoin for longer than one year. 7 All of your gains would be short-term, and you would report them on Form 4797 if you elect market-to-market trading. Any Bitcoin-related expenses would be deductible on Schedule C.

Are Bitcoin and other cryptocurrencies subject to capital gains taxes?

Under U.S. tax law, bitcoin and other cryptocurrencies are classified as property and subject to capital gains taxes. But you only owe taxes when those gains are realized. Just because your Coinbase portfolio drastically grew in value last year doesn’t mean that you’ll be writing out a check to Uncle Sam come April.

What if the IRS treated bitcoin as a currency?

For example, had the IRS treated bitcoin as a currency, special tax rules would have applied to its use and ownership. Unlike most assets, the gain or loss from a sale of bitcoin, or its use in an exchange, would generally be taxed as ordinary income, and be ineligible for capital gain treatment. [1]

Do you have to report bitcoin on your taxes?

"It doesn't matter to the IRS – for U.S. taxpayers – where the bitcoin is acquired or disposed of. It must be reported on your tax returns and any income or capital gain or loss indicated," says Steve Skancke, chief economic advisor at Keel Point. That said, tax reporting on bitcoin can be as mind-boggling as the cryptocurrency itself.