TurboTax FAQ
TurboTax FAQ
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How is cryptocurrency like Bitcoin taxed?

Cryptocurrency is taxed when you receive it as payment or have a transaction where you sell or trade it. If you just buy it and hold onto it, it won’t be taxed until you do something with it.

For tax purposes, it’s either considered earned income or treated as property sales. We can help you figure out which applies to your situation.

It’s considered earned income when you:

  • Receive it as payment for goods or services (like if you were paid in cash)
  • Mine it and make a profit

It’s treated as a property sale, and the earnings are capital gains, when you:

  • Sell it (like you would stock)
  • Exchange it (swap one type of cryptocurrency for another)
  • Spend it (use it as payment for goods and services)
  • Convert it to US dollars (sell cryptocurrency to buy regular currency)