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How is cryptocurrency used for personal purchases taxed?

SOLVEDby TurboTax20Updated June 02, 2023

If you use cryptocurrency to buy things like coffee or movie tickets, you might have to pay taxes on it.

The IRS doesn’t consider cryptocurrency as a cash alternative, like a credit or debit card. Instead, the IRS treats cryptocurrency as property, meaning there could be a taxable gain or loss whenever cryptocurrency changes hands.

For example, if you spent $5 on a coffee using a coin you purchased last year for $4 (but now it's worth $5), you have a taxable gain of $1.

Your crypto wallet may send you a Form 1099-K or Form 1099-B, showing the total value of your cryptocurrency activity. Follow these steps to import cryptocurrency transactions into TurboTax.

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