Filing a tax return with the IRS can be a hassle, but filing the return can be even more daunting if you have cryptocurrency.
Often times there is transferring of crypto from wallet to wallet, which can make keeping track harder.
This means if you’re actively trading cryptocurrency, you need to keep records of all of your purchases and transactions.
Many people fail to report cryptocurrency because they don’t realize it’s taxable.
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What counts as a taxable event with the IRS regarding cryptocurrency?
If you exchange your cryptocurrency for another form of cryptocurrency then that needs to be reported to the IRS.
This is because cryptocurrency is considered property in the eyes of the IRS.
If you sell your crypto then you must report it as if you sold a house.
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The same rule applies to NFTs.
If you earn crypto by mining or staking your coins, you have income you must report.
By selling it, you also need to report it to the IRS as another taxable event.
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