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mdyune
Returning Member

no tax until you cash out?

for crypto, you only pay tax when you withdraw it for cash, right? how about

1. sending crypto to myself into different wallet or different platform

2. sending crypto to other people

3. sending crypto to myself into international platform

any of these trigger tax requirement?

Thank you!

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3 Replies
MarthaT
Employee Tax Expert

no tax until you cash out?

Hello and thank you for your question,

 

To answer your questions,  Crypto is treaty as "Property" therefore you pay taxes when you buy, sell or exchange crypto.  

 

1.  If you send crypto to yourself into a different wallet or different platform does not trigger any tax liability.  Unless you sell it or exchange this virtual currency then it will trigger taxes.

 

2. If you send crypto to another person does not trigger taxes.  If you are paying another person services provided to you with crypto currency then the other person needs to report it as income and pay taxes.   It will apply to you too if you received payment for services you provided and get paid with crypto then you need to report it as income in your tax return in schedule C.

 

3.  If you send crypto to yourself into an international platform will not trigger any tax liability unless you are exchanging, selling, or buying crypto currency this crypto currency

 

I hope this answered your question.  You can also find more detail information at:

 

4Crypto Tax Myths You Need to Know

https://turbotax.intuit.com/tax-tips/investments-and-taxes/4-crypto-tax-myths-you-need-to-know/L4cej...

 

Thank you for your question

 

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mdyune
Returning Member

no tax until you cash out?

thank you for your reply, Very helpful

It makes sense and is in line with what I thought. One question is related #2. If I send crypto to someone else, I will avoid capital gain tax. But does that mean that person who received has to pay the capital gain when he/she sells it based on my cost? Or her/his cost is based  on the price when I send crypto? I'm asking because this can be a loop-hole people can avoid tax by sending around to other people.

Thanks 

MarthaT
Employee Tax Expert

no tax until you cash out?

Thank you and good question

 

If you send crypto to a person and you are not paying for any services but it is given as a gift to the other person then the costs basis would be the same as your cost basis, the donor.  Whenever the person sells the crypto it will pay taxes on the gain if there would be any or report the loss if there would be any.

 

If you gift more than  $17,000 value you need to file a gift tax return.

 

I hope this answer your question.

Thank you so much

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