Is crypto taxed in the U.S.?

U.S. taxpayers must report cryptocurrency sales, conversions, payments, and income to the Internal Revenue Service (IRS) and applicable state tax authorities, and each crypto transaction has different tax implications.

Why do crypto users need to pay crypto tax in the U.S?

In America, cryptocurrencies are considered a digital assets, and the Internal Revenue Service IRS generally treats them as stocks, bonds, and other capital assets. Like these assets, the money crypto traders earn from cryptocurrency is taxed at different rates, either as capital gains or as income, depending on how you acquired the cryptocurrency and how long you held it.

To find out if the crypto users owe taxes, it's important to look at how they're utilizing their cryptocurrency in 2021. A transaction that results in a tax is called a taxable event. Those are not called non-taxable events.

Taxable crypto event:

Taxed as capital gain

Selling      crypto for cash

Converting      one crypto to another

Spending crypto on goods and services

Taxed as income

Getting paid      in crypto

Getting      crypto in exchange for goods and services

Mining      Crypto

Earning      staking rewards

Earning      other income

Getting      crypto from a hard fork

Getting an      airdrop

Receiving other incentives or rewards

Non-taxable situation

Purchasing      crypto and holding it all the time:

Donating      crypto

Receiving      crypto as a gift

Sending crypto in your own wallet