Is there a tax implication of sending or receiving cryptocurrency to family and friends inside or outside the US?

[mazinks83]

I send money to my family on a regular basis through money transfer services but now I'm thinking to send them cryptocurrency and then they can cash it out in local currency since it's cheaper and faster. Will there be any tax implications? I've the same question for when receiving cryptocurrency.

Thanks!

[DaveF1006]

Yes, there are tax implications for these types of transactions. First of all, you will need to file a Gift Tax Return, if you give away more than $18,000 per year, the you need to file a 709 Gift Tax Return that reports the gift. This is separate from your regular tax return. Receiving Crypto as a gift is not a taxable event unless you sell it or make a purchase with it.

In addition, you may have wire transfer reporting requirements to the IRS. Please review these requirements here. Look in the section entitled What's Cash.

If you receive more than $100,000 per tax year of crypto from a foreign person during the year, you need to report this is in a 3520 form. This is not a tax form but an informational form that the IRS requires. There is more information here regarding 3520 filing requirements.