Crypto Tax FAQs

For most online investors and entrepreneurs, the crypto tax rules about digital currencies like Bitcoin are hard to keep up with and often confusing. Below are some of the frequently asked questions about crypto tax compliance. This is just the tip of the iceberg but the crypto tax accountants at W. E. Stevens, P.C. have all of the answers you need. For sound advice on when and how to report taxes on your cryptocurrency earnings, request your free consultation online now or give us a call at (402) 932-8815.

Do individuals need to report income from cryptocurrencies?

YES! The IRS has made this crystal clear. Starting in 2020, one of the first questions listed on Form 1040 asks individual taxpayers if they've received any income from virtual currency. The IRS categorizes cryptocurrency as property for tax purposes. This means, you may need to pay capital gains taxes (Schedule D) on any cryptocurrencies that you've traded, used to purchase goods, received as payment for services you performed, or received via a fork and/or airdrop.

Do I need to report Bitcoin or cryptocurrency you’ve purchased?

If you’ve purchased cryptocurrency and have held it throughout the tax year, you don’t owe taxes on the transaction or on the current dollar value of the currency. However, will need to report and pay tax on activities like selling, trading, or receiving digital currencies as payment for a service.

Do I need to report cryptocurrency given as a gift?

If you've received digital currency as a gift, the gift tax rules apply. That means its possible that a gift tax return will need to be filed and, as with any monetary gifting, proactive tax planning can reduce liabilities. For the best result, seek advice from a qualified crypto tax accountant on how to control taxes in this case.

Do I need to report my mining income?

Mined digital currency is considered gross income and must be reported on your tax return. These taxes are calculated using the fair market dollar value of the currency on the date that it was mined.

Will Coinbase send me a 1099?

Coinbase sends 1099s to U.S. traders making more than $600 from crypto in the last tax year. They also send a copy to the IRS.