How is Bitcoin Taxed in the U.S.? 🧐
Bitcoiners,
Here is a quick explainer of how the IRS treats Bitcoin in 2022 and what actions are considered taxable or nontaxable events so you can start preparing for the end of the year.
Disclaimer
Eric’s attorney here for a friendly reminder.
The tax related language in this document has not been vetted by a CPA or a tax attorney. It is not tax advice and you should not take action based on what you read here without the advice of your own CPA and counsel.
United States Taxes Related to Bitcoin in 2022
To be clear, this section will only give you information related to buying, selling, and/or transacting with Bitcoin.
Coinbase, a popular US exchange, has a 2021-2022 Tax Guide posted on their website. The quote below is taken from their guide:
In the U.S., crypto is considered a digital asset, and the IRS treats it generally like stocks, bonds, and other capital assets. Like these assets, the money you gain from crypto is taxed at different rates, either as capital gains or as income, depending on how you got your crypto and how long you held on to it.
Here is a list of taxable events relating to Bitcoin as defined by the IRS:
Converting Bitcoin to another crypto or vice versa
Paying for good or services with Bitcoin
Receiving Bitcoin from mining
Receiving Bitcoin rewards
Selling Bitcoin for dollars
Earning staking rewards
Being paid in Bitcoin
Here is a list of nontaxable events relating to Bitcoin as defined by the IRS:
Giving Bitcoin or receiving it as a gift
Buying Bitcoin and holding onto it (HODLing)
Donating Bitcoin to a tax-exempt charity or nonprofit
Transferring Bitcoin between your own personal wallets
I hope this list is helpful as you start preparing for the last quarter of 2022!
Happy Thursday,
-Pod
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Eric Podwojski
Founder, Bitcoin EDU
Twitter: @epodrulz
Disclaimer: This should go without saying: This is not financial advice. This is not investment advice. I write this newsletter for education and entertainment. Act accordingly.
