If you receive payment for goods or services in cryptocurrency, engage in trading, staking, mining, or transfer money from another country using crypto, you need to know a few basic rules regarding cryptocurrency taxes:
If you receive payment for goods and services in crypto or engage in mining, the reporting happens in two stages:
First, you report the income received in Schedule C. If you use USDT for calculations, it is simple. However, if you use any other cryptocurrency, you must record the price at which you received it at that specific time.
Second, when you sell (or exchange) the cryptocurrency, you report it on Form 8949.
If you received payment for goods or services in cryptocurrency with a value equivalent to $10,000 or more, you must file Form 8300 with the IRS.
You use cryptocurrency as a method of transferring money from another country. What is the origin of the cryptocurrency? Payment for work, savings, a gift, the sale of an apartment? The answer determines the first stage of reporting – Schedule C, 4797, 3520… The withdrawal (sale) is reported on Form 8949.
Exchanging one cryptocurrency for another is a sale that must be reflected on Form 8949.
Income from staking is taxed on the same as interest. The tax rate depends on the length of time you held the crypto before selling it:
Less than one year – ordinary income tax rate up to 37%.
More than one year – long-term capital gains tax up to 20%.
If you are a U.S. tax resident, it does not matter which exchange you buy or trade cryptocurrency on. You must report all income.
Very few exchanges issue Tax Form 1099-B, so you will have to “obtain” the information for filing your tax return independently, often through a third-party program like Coinly or CoinTracker.
