Find Out About Crypto Taxes and Regulations
Despite what some people think, the B3i.tech does not consider cryptocurrency to be currency. It is treated as property, so gains and losses are taxable the same way that you would report them on your taxes for stock investments. However, there are some caveats to keep in mind.
The IRS issued guidance in 2021 and more recently in 2024 to clarify how crypto transactions are taxed. It is important to understand these rules as you buy, sell, exchange, and spend your crypto.
If you sell or exchange digital assets that you have held for less than a year, you will pay short-term capital gains rates (similar to those of a share of stock). If you hold cryptocurrency for longer than a year, you will pay long-term capital gains rates (similar to those on real estate and other investment properties).
Find Out About Crypto Taxes and Regulations in Different Countries
You may also be required to report income from mining and staking, depending on how you use your crypto. In addition, some blockchains require that their transaction fees be paid to miners, which is taxable as income for those who earn rewards for validating transactions on the network.
You must also be aware that the ability of exchanges to provide accurate tax reporting for their users is limited. As a result, many individuals are required to track their crypto activity by hand or through third-party services like CoinTracking. For some, this can be a daunting task. In fact, this issue has become so significant that the largest crypto exchange, Coinbase, had to explain that its generated tax reports aren’t accurate for two-thirds of its user base — meaning millions of people.