Wednesday, October 17, 2018

Thinking of Paying Your Rent with Bitcoin?

Bitcoin is a popular form of cryptocurrency that more and more people are using these days. In fact, there’s even an option to pay your rent with Bitcoin. There are several apps that make this possible.

But, before you rush out and start paying rent with Bitcoin or using the currency in general, you need to understand how Bitcoin can affect your taxes.   

Reporting Bitcoin

First of all, there seems to be a major misconception that you don’t have to report Bitcoin income to the IRS. While that would certainly be nice, it’s definitely not true. Bitcoin income has to be reported to the IRS just like any other income.

The IRS considers Bitcoin to be an asset, so you report it as such. Also, keep in mind that how long you keep your Bitcoin will determine whether it’s a short-term gain or a long-term gain

With this in mind, when you use Bitcoin to pay for your rent or for anything else, you need to report it appropriately. Using your Bitcoin to buy something is the same as selling it, and if you make a profit in the process, it will be taxable as a gain.

If You’re Feeling Confused

Dealing with a new currency or, as the IRS sees it, a new asset, can be tricky. Thus, if you’re confused about reporting Bitcoin to the IRS, don’t feel bad. A lot of people feel confused when dealing with this new currency. The IRS even seems a little confused itself!

The key is to handle your confusion the right way by seeking help from a qualified professional accountant. They understand all the tax laws and can help to ensure you report your Bitcoin accurately and correctly.