Expert Crypto Accountants

Cryptocurrency transactions in the US have specific tax implications that depend on the nature of the transaction. Here's an overview of various scenarios:

• Receiving Crypto as Payment or Airdrop: If you receive cryptocurrency as payment for goods, services, or through an airdrop, the received amount is subject to taxation at ordinary income tax rates.

• Disposing of Crypto (Selling or Trading): When you sell or trade cryptocurrency, the resulting net gain or loss is treated as a capital gain or loss. The tax rate for this capital gain varies based on how long you held the cryptocurrency.

• Income from Staking, Lending, or Selling: Earnings from staking, lending, or selling cryptocurrency are taxable income. All cryptocurrencies are regarded as capital assets, leading to capital gains taxes on profitable sales.

If you owned the cryptocurrency for less than a year before selling it, you'll face higher capital gains tax rates (between 10% and 37%). Holding it for over a year qualifies you for lower rates (0% to 20%). These rates are tied to your total annual income.

• Various forms are used to report cryptocurrency-related transactions:

• Forms 1099 are for reporting cryptocurrency-related income.

• Form 8949 is used for reporting capital gains transactions.

• Forms 1099-B report transactions, while Form 1099-MISC covers cryptocurrency payment for services.

• NFT transactions are reported using Form 1099-NEC.

• All these forms must be submitted to the IRS, regardless of the tax amount owed.

Cryptocurrency trading results in short-term or long-term capital gains, depending on how long you held the asset. Short-term gains are taxed at your regular income tax rate, while long-term gains are taxed at lower rates.

Short-term gains (held for less than a year) are taxed at ordinary income rates (10% to 37%).

Long-term gains (held for over a year) incur lower rates (0% to 20%) based on your income.

Selling cryptocurrency for fiat money triggers a taxable event. Capital gains or losses are calculated by subtracting the cost basis from the sale price, with gains taxed at appropriate rates and losses deductible up to a certain limit.

Buying goods or services with cryptocurrencies can be taxable, with the taxable event being the difference between the crypto's purchase price and its fair market value during the transaction. This difference is treated as a capital gain or loss.

Exchanging one cryptocurrency for another incurs capital gains or losses tax, depending on the gain or loss achieved. The calculation involves comparing the fair market value and the original cost basis of the cryptocurrency.

Activities like crypto margin trading, futures trading, and CFDs are subject to capital gains or losses tax, based on the difference between the cost basis and the fair market value during the trade.

NFT transactions are treated similar to other cryptocurrency transactions. Gains from buying, selling, or trading NFTs are subject to capital gains tax, with rates varying based on holding duration.

When you receive cryptocurrency as payment, the fair market value determines your income, reported on your tax return. Gains from selling the received cryptocurrency after a year are subject to capital gains rates.

Exchanging cryptocurrency for goods or services treats the cryptocurrency's value during the transaction as ordinary income. Reporting the fair market value on your tax return and paying taxes on it is required. It's crucial to understand these tax implications, maintain comprehensive transaction records, and accurately report them to the IRS when filing your taxes to ensure compliance and avoid penalties.