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
Earning staking rewards
Earning other income
Getting crypto from a hard fork
Getting an airdrop
Receiving other incentives or rewards
Purchasing crypto and holding it all the time:
Receiving crypto as a gift
Sending crypto in your own wallet