Bitcoin and other forms of “cryptocurrency” are rapidly
gaining popularity and becoming more widely used. Despite this fact, however,
this form of money is still new, leaving
many people with questions about how it all works.
One of the most commonly-asked questions people have is if
Bitcoin is taxable, and the answer is a definite yes.
Back in 2014, when the IRS caught wind of cryptocurrency, it
declared it as property that could be taxed. So, just like with anything else,
you will pay taxes on Bitcoin gains, and you can write off those Bitcoin
losses. Just keep in mind, however, that Bitcoin is truly taxed as property,
not money, so property rules apply to Bitcoin and other cryptocurrency
transactions.
And speaking of transactions, to make sure you do everything
correctly come tax-time, keep careful records of all of your
Bitcoin/cryptocurrency transactions. Also, make sure that you hire an
accountant who is familiar with Bitcoin and other forms of cryptocurrency. You
don’t want to work with someone who doesn’t understand this new form of
currency and the tax laws surrounding it.
In the coming years, Bitcoin is expected to become even more
common and widely used. But, until then, it may take some digging to find
accountants who can help you with Bitcoin-related taxes. Once you find a good
accountant, however, you should have no problem continuing to enjoy
cryptocurrency and handling your taxes related to it.