Bitcoin has really taken off in the last few years, with more Americans participating in trading. Now they want to know, do they need to report profits to the IRS on tax returns?
When cryptocurrency first began, it was relatively unregulated, which made it so popular. Not being regulated meant not have to pay taxes on earnings.
In 2022, that is no longer the case.
Today if you trade in the cryptocurrency market, you need to pay taxes on your earnings or the IRS will come after what you owe.
IRS and the cryptocurrency market
The IRS has spent a few years figuring out the best way to handle cryptocurrency.
Those who mine cryptocurrency need to report their earnings or risk facing losing money and time fixing their tax liability.
The IRS recognizes cryptocurrency as property, so they’re taxed similarly to stocks.
If you haven’t actually cashed out but have left the crypto in your digital wallet, you do not need to report your earnings for 2022.
You’ll also be taxed for buying goods and services like food or coffee with crypto.
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