If you earned money by providing a service or selling something, you’d have to report it as earned income (either wages or self-employment income) as if you’d been paid in cash.
The receipt of cryptocurrency or the sale of it is a taxable event on your income tax return and must be reported.
Cryptocurrency sold, exchanged, spent or converted, is treated as sale of property
Like property sales or the sale of stock, any gain or loss from the sale or trade of cryptocurrency is reported as a capital gain or loss.
If you buy and sell it within 12 months, it’s treated as a short-term capital gain. If you hold it for over 12 months, it’s taxed at the lower, long-term, capital gain rates.
Cryptocurrency received as income, and then held and sold for profit, is taxed as both.
If you were paid in cryptocurrency, you'd first pay taxes on the earned income.
Then, if you later sold it for a profit, you'd pay the capital gains tax (short or long-term, depending on how long you held it). You'd also need to keep track of the value it had when you got it, and when you sold/used it.
As an example: If you were paid in cryptocurrency on Monday, and then used it to pay for something else on Friday, you'd have to know what it was worth during both days in order to calculate if you needed to report a gain or a loss.
In this case, it would be like paying for something with stock instead of cash.
Please refer to the following link for additional information :
[Edited 02-08-24|10:21 PST]
So I know I must report this. I have under 2500 transactions, and the issue is my CSV file from Coinbase will not download into my turbotax account for my return. The error (when attempting to download it is “Coinbase-...0_39.csv No headers found in this file”. I need assistance with this please.
Is your transaction amount more than 2,251 which is the max amount of transactions you can do in TurboTax? For more information please click the link below. If you need additional assistance please click here to help get you connected to the right person for support.
**Mark the post that answers your question by clicking on "Mark as Best Answer"