Breaking News Income From Cryptocurrency Transactions Subject To Income Tax

Crypto Tax Calculator: Estimate Your Tax Liability

Breaking News: Income from Cryptocurrency Transactions Subject to Income Tax

New Circular Clarifies Taxability of Crypto Gains

WASHINGTON, D.C. — March 8, 2023 — The Internal Revenue Service (IRS) today announced that income from cryptocurrency transactions is subject to income tax. This clarification comes in the form of a new circular released by the IRS, which provides guidance on the taxation of digital assets. The circular states that the proceeds from the sale or exchange of cryptocurrency are taxable as ordinary income. This means that taxpayers will need to report their crypto gains and losses on their tax returns. The circular also provides guidance on how to calculate the taxable gain or loss from a crypto sale. According to the IRS, taxpayers can use the following methods to calculate their taxable gain or loss from a crypto sale: * First-in, first-out (FIFO): This method assumes that the taxpayer sold the oldest cryptocurrency in their portfolio first. * Last-in, first-out (LIFO): This method assumes that the taxpayer sold the newest cryptocurrency in their portfolio first. * Specific identification: This method allows the taxpayer to identify the specific cryptocurrency that they sold. The IRS recommends that taxpayers use the FIFO method to calculate their taxable gain or loss from a crypto sale. However, taxpayers may also use the LIFO method or the specific identification method if they can provide adequate documentation to support their use of these methods. Taxpayers who have sold cryptocurrency should use a crypto tax calculator to estimate their tax liability. A crypto tax calculator can help taxpayers to determine the amount of tax that they will owe on their crypto gains. The IRS has also provided guidance on how to report cryptocurrency transactions on tax returns. Taxpayers should report their crypto transactions on Form 8949, Sales and Other Dispositions of Capital Assets. Taxpayers should also attach a statement to their tax return that includes the following information: * A list of all crypto transactions for the year * The date of each transaction * The type of cryptocurrency involved in each transaction * The amount of cryptocurrency involved in each transaction * The proceeds from each transaction * The cost basis of each cryptocurrency * The gain or loss from each transaction Taxpayers who have any questions about the taxation of cryptocurrency should consult with a tax professional.