Assets, Bitcoin

Do I Have to Tell the IRS I Bought Bitcoin?

When it comes to taxes, there are a lot of questions surrounding cryptocurrency. One of the most common questions is whether or not you have to tell the IRS about your Bitcoin purchases.

The answer is yes, you do have to report your Bitcoin purchases to the IRS. However, how you report them depends on how you acquired them.

NOTE: WARNING: It is important to note that the IRS does not currently consider virtual currencies like Bitcoin to be legal tender. Therefore, it is illegal to use Bitcoin or any other virtual currency as a form of payment for goods or services in the United States. Furthermore, if you are using Bitcoin to buy goods or services, you may be required to report this activity to the IRS on your taxes. As such, you should always consult a qualified tax professional for advice about your specific situation.

If you purchased Bitcoin from an exchange, then you will need to report it as a capital gain or loss on your tax return. The amount of tax you owe will depend on how long you held the Bitcoin before selling it.

If you mined Bitcoin, then you will need to report it as income on your tax return. The amount of tax you owe will depend on your marginal tax rate.

Either way, it is important to keep track of your Bitcoin transactions so that you can accurately report them come tax time. Failure to do so could result in penalties and interest charges from the IRS.

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