In this guide, we discuss everything you need to know about cryptocurrency taxes. From the high level tax implications to the actual tax forms you need to fill out, you\u2019ll learn all about what you need to stay compliant and get your taxes done properly.\u200dJust like other forms of property like stocks, bonds, and real estate, you incur capital gains and capital losses on your cryptocurrency investments when you sell, trade, or otherwise dispose of your crypto.For example, if you bought $10,000 worth of bitcoin in October and sold it two months later for $12,000, you would incur a $2,000 capital gain from the sale of your bitcoin (12,000\u201310,000).Outside of buying, selling, and trading, if you earn cryptocurrencies-whether through a job, mining, staking, airdrop, or interest from lending activities-you are liable for income taxes on the US Dollar value of your crypto earnings.We will walk through examples for all of these scenarios further below.Whenever you incur a taxable event from your crypto investing activity, you incur a tax reporting requirement.A taxable event simply refers to a scenario in which you trigger or realize income. As seen in the IRS virtual currency guidance, the following are all considered taxable events for cryptocurrency:Trading crypto to fiat currency like the US dollarTrading one crypto for another cryptocurrencySpending crypto to purchase goods or servicesEarning crypto as income\u200dBelow, we run through practical examples to illustrate each of these taxable events.Emma buys 2 ETH from Coinbase for $1,200. A few months later, Emma sells her 2 ETH for $1,000.Selling crypto for fiat currency is a taxable event. In this example, Emma incurs a $200 capital loss (1,000\u20131,200). This loss gets deducted and actually reduces Emma\u2019s taxable income.John purchases 5 Litecoin for $250. After holding onto his Litecoin for a couple of months, John trades all 5\u2026<\/p>","protected":false},"excerpt":{"rendered":"
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