IRS & Bitcoin, do you have to pay taxes on BTC and cryptocurrencies?

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IRS & Bitcoin, do you have to pay taxes on cryptocurrencies

IRS & Bitcoin, do you have to pay taxes on BTC and cryptocurrencies?

Who says new money, says new laws and tax regulations.

Bitcoin is a new form of money, a digital currency or cryptocurrency.
Therefore, what taxes and tax laws govern Bitcoin and cryptocurrency like Ethereum (ETH), XRP, Litecoin (LTC), etc …?

Do you have to pay taxes on Bitcoin BTC?
Should you declare your Bitcoins or cryptocurrencies to the IRS (Internal Revenue Service) or the tax administration of the country where you live?

Bitcoin is a digital asset with which it is possible to pay for goods and services but also to do trading in order to generate financial profits on the movements of its price.
Simply buying or holding Bitcoin or another cryptocurrency does not imply the payment of tax.

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Indeed, the basic role and why Bitcoin was created is to be a payment solution between people (peer to peer cash).
Like the Euro or the Dollar, Bitcoin cryptocurrency must allow you to buy or sell goods and services with BTC as a means of payment.
A cryptocurrency can also allow you to pay someone for a service.

In the Unites-States and in most modern countries, if you wish to use Bitcoin as a payment solution or digital currency, the fact of acquiring and owning it for your needs is not taxable, there is no tax payable because you own  Bitcoin or another cryptocurrency.

Do you have to declare your Bitcoins or cryptocurrencies to the tax authorities?

The law says that you have to declare all your bank accounts.
To be transparent and in good standing with the IRS and tax authorities, you should declare the accounts that you have at Kraken, Coinbase, Bitstamp, Gemini, …

The tax authority may need to verify if you have made any capital gains on any of your accounts on a crypto exchange where you can do crypto trading with Bitcoin BTC, Ethereum, etc …

Bitcoin BTC Trading and Financial Capital Gains

The price of Bitcoin varies constantly, its price can go up or down by several percent at each moment.

A few years ago, a Bitcoin BTC was worth a few dollars, today we are talking about thousands of dollars!

Anyone can therefore speculate on price movements in order to make profits and gains by buying and selling Bitcoin BTC.
If you buy Bitcoin BTC, its price goes up by 20% and you resell it for dollars or euros, you have made a profit of 20%.

In this case, any gain in value when you resell Bitcoin in Euro, Dollar or other currency requires you to declare it to the tax authorities like the IRS and pay the tax rate corresponding to this type of financial asset.

In this case, yes, Bitcoin BTC ou any other cryptocurrency a financial asset that can generate financial capital gains, implies having to pay taxes on these capital gains realized on Bitcoin BTC or another cryptocurrency.

Bitcoin Crypto Advice is not a tax or financial adviser, check with the tax authorities of the place where you live to find out what taxes apply to Bitcoin BTC or other crypto currencies on the market.
Especially that tax laws and regulations on Bitcoin can change at any time as well as in any other country.

Each country has specific tax laws and regulations on Bitcoin BTC, some countries do not tax capital gains on Bitcoin to attract traders.
Read our article about Portugal, a country where there is no tax on Bitcoin BTC for example.

Canada will accept Bitcoin to pay taxes.

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