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USA: what is the tax rate for cryptocurrency?


Do you have to pay taxes on cryptocurrency? Depending on the moves you plan to make, you might be entitled to pay or deduct taxes. We’ve created a list of taxable and non-taxable events involving cryptocurrency tax rate to help bring you some clarity! 

Before getting into it, ForumPay does not offer tax or financial advice. This article serves strictly to give insight into crypto and how it could be taxed. 

How does the USA treat crypto taxes?

Crypto sales, conversions, transactions, and income need to be reported to the IRS and state tax authorities, just like any other report. Crypto is considered a digital asset in the USA and can be taxed either as capital gains or as income depending on how you acquired your crypto.

Non-Taxable Crypto Events:

Here is a list of crypto actions that don’t require paying taxes:

  1. Buying crypto: buying and holding crypto is not a taxable event. You can buy and own crypto without any tax restrictions.
  2. Receiving crypto: if you’re simply given or gifted crypto, it is safe from being taxed.
  3. Transferring crypto to yourself: moving crypto funds between your own wallets and accounts is not taxable. 
  4. Giving crypto: whether donating or giving as a gift, giving crypto to non-profits, charities, or people up to $15,000 worth is not taxable either.  

Taxable Crypto Events:

Some crypto moves require paying or deducting taxes and we are here to help you know what those are.

Capital gains taxes: 

  1. Selling crypto for fiat: selling crypto for cash becomes a taxable event as you are taxed on assets you paid more for what you sold them. If you sell at a loss, you may be applicable for a deduction. 
  2. Converting crypto: if you sell your crypto for another crypto, that sale becomes taxable, especially if you sell it for more than what you buy it for. 
  3. Spending crypto: buying goods and services with crypto as the IRS views spending crypto a lot like selling it. 

Income taxes: 

  1. Getting paid in crypto: if you receive all or part of your salary in crypto it will be taxed as compensation complying with your income tax bracket. 
  2. Accepting crypto payments: if you accept crypto you need to report it as income to the IRS as any other capital gain.
  3. Mining crypto: crypto mined will require you to pay taxes on your earnings based on the market value of the mined coins at the moment they were received.
  4. Staking crypto: taxes are based on the market value the moment you received your staking rewards.
  5. Getting crypto rewards: some exchanges have reward programs, airdrops, or incentives. If you accumulated these rewards, you are subject to report them as income tax. 
  6. Hard fork earnings: hard forks are blockchain events that can validate pending invalidated transactions due to changes in protocol. Any gains from this event are subject to being taxed. 

USA Taxpayers:

When filing income taxes, you owe taxes due to your tax bracket. Visit the IRS website to make sure you are conscious of your tax bracket. If you made hefty earnings from crypto, it might change what tax bracket you fall under. 

When filing capital gains taxes, you should look into the long-term and short-term brackets. Capital gains are applied at the federal and, if applicable, state levels. Long-term capital gains are usually taxed at a lower rate than short-term gains. These rates vary depending on your income. Short-term gains are taxed at a regular income rate, which runs higher. 

More Information:

If you need more information about cryptocurrency tax rate, visit IRS.gov where you can learn more about crypto income and capital gain taxes. We also recommend checking in every once in a while as regulations are subject to change due to potential new crypto policies surfacing.

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ForumPay does not disclose financial advice. Anything shared is strictly to inform, entertain, or share thoughts and ideas. Please seek a registered financial advisor if you are looking for financial advice.


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