US tax laws treat cryptocurrency as property, like any other asset. General tax principles therefore apply to any crypto transactions, but let?s look at what that really means. This article gives crypto tax accounting tips that will help you get your taxes done correct and lower you stress at tax time.
How Will I Be Taxed For Selling A Cryptocurrency"
In crypto accounting each time you sell your digital assets, it will be recognized as either a capital gain or loss. Gains will be taxed depending on whether you?ve held them long or short term. If you hold digital assets for less than one year it will be classed as a short-term capital gain that for US citizens is taxable at the same rate of ordinary income, from 10% to 37%. Furthermore, if you wait for more than one year before selling it will be classed as a long-term capital gain and taxed between 0 and 20% depending on your income level. For a deeper dive see Publication 544, Sales and Other Dispositions of Assets. You must know, in crypto tax accounting, the gain or loss is calculated by the difference between your adjusted basis and the amount you sold for cash or fiat. Simply put, the cost basis is the amount you spent to buy your crypto and includes fees, commissions, and any other costs. For more information, see Publication 551, Basis of Assets.
How Is Cryptocurrency Income Taxed"
According to tax law, getting paid in property including crypto for performing a service as an employee or not counts as ordina...