Crypto & Bitcoin Tax Guide

CoinTracker is provided for informational purposes only. This service is not intended to substitute for tax, audit, accounting, investment, financial, nor legal advice. For financial, tax, or legal advice please consult your own professional. Please see our full disclaimer.

How are cryptocurrencies, like bitcoin, taxed?

Cryptocurrency tax rules vary from country-to-country. For this article, we will focus on the US, however you can see more information about other countries such as Australia, Canada, and the United Kingdom).

In 2014, the Internal Revenue Services (IRS) released guidance that virtual currencies are taxed as property. This means that capital gains tax applies to cryptocurrencies such as bitcoin. For example if you purchase bitcoin, it appreciated in value, and then you sell it, the gain is taxed. Similarly, if the bitcoin depreciates in value, you may be able to deduct the losses against other capital gains to reduce your taxes.

In general, these are examples of taxable events with regards to cryptocurrency:

  • Selling cryptocurrency for fiat currency (i.e. USD, CAD, EUR, JPY, etc.)
  • Trading cryptocurrency for other cryptocurrency
  • Using cryptocurrency to buy a good or service
  • Receiving cryptocurrency as a result of a fork or from mining

These are not considered taxable events:

  • Buying cryptocurrency with fiat currency (except in cases where the purchase price is lower than the fair market value of the purchased coin)
  • Donating cryptocurrency to a tax-exempt organization
  • Gifting cryptocurrency to anyone (if the gift is sufficiently large it may trigger a gift tax)
  • Transferring cryptocurrency from one wallet that you own to another wallet that you own

Learn more

How do forks, airdrops, and mining work with regard to cryptocurrency taxation?

See here for more details on forks and airdrops. Here are more details on reporting cryptocurrency mining.

How much tax do I owe?

The amount of tax depends on how much capital gain/loss there has been on the asset, how long you have held the asset, and the specific regulations in your country/jurisdiction. Because each taxable event may create a capital gain, you need to know the date, cost basis, sale value, and any fees associated with each transaction. For more information about tax rates, see here.

This can quickly become thorny, which is why we built CoinTracker — to automate this whole process for you!

How does CoinTracker work?

CoinTracker automatically syncs your transactions and balances across all the top cryptocurrency exchanges and wallets, to provide you a fully reconciled transaction history. This works across 2,500+ coins and tokens, and provides historical and current pricing, cost basis calculation, ROI, and performance charting. In addition, CoinTracker applies your country's tax rules to calculate your capital gains and income from cryptocurrency in each taxable year, and if relevant, completes your tax form (IRS Form 8949 example).

Here is a full video tutorial of CoinTracker in action from start-to-finish:

Where I can buy a CoinTracker Tax Plan?

Right here.

Once I purchase a tax plan, how can I file my taxes?

CoinTracker gives you the form so that you can file yourself, send the necessary tax documentation to your accountant, export to TurboTax or TaxAct, or file in other ways. See more options here.

Which tax forms do I need to complete?

At a minimum, you'll need a Form 8949 (example) — the IRS form for Sales and Other Dispositions of Capital Assets. CoinTracker will produce this form for you along with a detailed cryptocurrency transaction history and capital gains CSV report.

You'll be able to use this information to complete your Schedule D and Form 1040. For more information, see here.

I still have questions about crypto and bitcoin taxes

For more information, please see the CoinTracker FAQ or message us on Intercom.

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