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.
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