Let’s start with what crypto activities are taxable and which are not taxable.
Taxable Events with Crypto:
If you sell crypto for fiat currency (USD), that’s taxable.
If you trade crypto for another crypto, that’s taxable.
If you use crypto to buy a good or service, that’s taxable.
If you receive crypto from a fork, that’s taxable.
If you receive crypto from your mining activities, that’s taxable.
Non-taxable Events with Crypto:
If you buy crypto with fiat currency, that’s not taxable.
If you donate crypto to a tax-exempt organization, that’s not taxable.
If you gift crypto, that’s not taxable. (There could be a gift tax due in certain situations.)
If you transfer crypto from one wallet to another wallet, that’s not taxable.
The IRS has had one big notice about cryptocurrency. It came in 2014. They issued another notice in 2018, which basically quoted 2014 notice. The Trump Tax Plan made one change that impacts crypto tax. That’s about all there is about the tax law that is formal.
Other than that, there just isn’t a lot of guidance. Yet. We can expect a lot of Tax Court cases in the next few years as the IRS crackdown on crypto noncompliance continues.
Don’t assume you’re invisible with crypto. You’re not. The IRS won the battle with Coinbase and they have turned over 14,500+ records of people who had transactions totaling $20K or more. During that time period of those transactions, 809 people reported. Once they hit audit gold (and they are about to!), they will be after more non-reporters in force.
There are strategies you can use! But first you have to agree to report and track your basis.
Got questions? Come join us Wednesday, June 20, 2018 for the next coaching session, “Tax Secrets for Cryptocurrency.” We’ll talk about strategy for putting more money in your pocket. There is a home study course plus we’ll have a live coaching session. Please note that the time is 5 pm Pacific. More details at: https://www.ustaxaid.com/coaching-program/