Cryptocurrency and Taxes: A Guide for the 2023-2024 US Tax Season

cryptonews.com:

If one thing in life is certain, it’s that we all have to pay taxes. Therefore, it’s important for cryptocurrency holders and investors to understand everything involved when it comes to crypto and taxes . This is becoming even more critical as digital assets gain mainstream adoption . 

Unfortunately, a lot of confusion remains around cryptocurrency and taxes. To put this in perspective, a “2023 Annual Crypto Tax Report” from CoinLedger — a crypto tax software company — found that 31% of investors surveyed did not report their crypto on their taxes, with half not doing so because they didn’t make a profit and 18% not even knowing crypto was taxable.

While this remains problematic, Tony Tuths – principal of alternative investments and digital asset tax practice leader at KPMG – told Cryptonews that he is hopeful the United States Internal Revenue Service (IRS) will finalize regulations for 1099 tax reporting this year.  “Once this happens, tax compliance will become easier,” he said. In the meantime, Tuths mentioned that individuals should be proactive when it comes to tracking their crypto gains and losses throughout the year. 

It’s important to understand that cryptocurrency is subject to both capital gains tax and income tax in the US. Dhiraj Nallapaneni, content manager at CoinLedger, told Cryptonews that cryptocurrency is categorized as property by the IRS, meaning that it is taxed similarly to stocks and equities. He said: 

“When you dispose of your cryptocurrency, you’ll incur a capital gain or loss depending on how the price of your crypto has changed since you originally received it. In other words, when you sell your crypto or trade it for another cryptocurrency you’ll incur a capital gain or loss