Crypto taxes

What are crypto taxes?

In the United States, cryptocurrency is subject to crypto tax—capital gains and ordinary income tax

Capital gains tax

When cryptocurrency is sold, that sale incurs a capital gain or loss depending on how the price of coins have changed since the original investment. Examples include selling your crypto, trading your crypto for another cryptocurrency, and using your crypto to make a purchase.

Ordinary income tax

When you earn cryptocurrency, you recognize income subject to ordinary income tax. Examples of this include mining rewards, airdrop rewards, staking rewards, and referral rewards.

You’ll be taxed based on the fair market value of your crypto income at the time of receipt. Because cryptocurrency is anonymous, many people believe that transactions cannot be tracked. This is not true.

Remember, transactions on blockchains like Bitcoin and Ethereum are publicly visible and permanent. Tax agencies can identify fraud by matching ‘anonymous’ wallets to known investors. In the past, the IRS has worked with contractors like Chainalysis for this very purpose.

Individuals report cryptocurrency capital gains and losses on Form 8949. Generally, cryptocurrency income is reported as ‘Other Income’ on Schedule 1 of Form 1040.

Open a CryptoIRA to start buying and selling coins and tokens through a Coinbase integration with the tax advantages of Traditional, Roth, and SEP IRAs.

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