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Cryptocurrency and non fungible tokens (NFT’s) are considered digital assets. Thus can be taxable and may need to be reported on your tax return.
A digital asset is considered property, and can be used as currency to purchase goods and services. You can trade it, sell it and acquire it online.
Starting in 2023 you will need to answer this question:
At any time during the tax year, did you: (a) receive (as a reward, award or payment for property or services); or (b) sell, exchange, or otherwise dispose of a digital asset (or a financial interest in a digital asset)?
If you answer yes you will then need to know how to report the asset.
Keep Records as not all digital assets companies may report to the IRS.
Calculate your capital gain or loss
Determine your basis
Report on the correct form
You will want to check NO if any of the below apply to you.
Didn't own any digital assets
Only owned or held digital assets in a wallet or account, but did not engage in any digital asset transactions during the year
Purchased, but did not sell, digital assets using U.S. or other real currency, including through electronic platforms
Transferred digital assets from one wallet or account you own or control to another wallet or account you own or control (unless you paid a transaction fee with digital assets. This would be a digital asset transaction.)
If you are unsure on how to report a digital asset and you have sold or traded coin, you will want to speak to a tax professional for guidance or to help you file your tax return.
To learn more about digital assets and taxes, please visit the IRS.gov. It is always important to verify information before filing.
Need help filing your return? Give us a call/text! We have super reasonable rates and are taking on new clients.
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