1.How to invest in cryptocurrency ?

Do You Have to Pay Taxes on Cryptocurrency?

Yes. Crypto gains are taxed at a regular capital gains rate: 10 to 37% for short-term gains and 0 to 20% for long-term gains.

According to the IRS, these three are non-taxable and don’t need reporting:

  • Buying crypto with cash and holding it (affectionately known as HODLing)
  • Donating crypto to a qualified tax-exempt charity or non-profit
  • Transferring crypto between wallets

Whereas the following do need to be reported and will be taxed as capital gains:

  • Selling crypto for cash (even if you lost money on your initial investment)
  • Using crypto to pay for goods or services
  • Exchanging one crypto for another
  • Mined crypto.
  • Being paid in crypto or by airdrop.
  • Receiving crypto as a bonus or a reward

If you don’t declare your holdings you can get penalized. It’s the same penalties for unpaid taxes – and as the IRS themselves say, “they can add up fast”:

  • A late filing fee
  • A late payment fee
  • Interest on top of both penalties

Your total penalty could amount to 25% or more of your unpaid tax amount.

Leave a Reply

Your email address will not be published. Required fields are marked *