Buying cryptocurrency with USD is not considered a taxable event
Your gains are not realized until you use, trade, or sell your crypto holdings. If you have only bought and held throughout the year, you don’t have to worry about reporting anything. However, trading one coin to another is in fact a taxable event and will need to be reported!
Long-term gains have discounted tax rates
If you have held onto your crypto for at least a year before selling, the gain on those coins is considered long term and you owe less for your taxes on that sale. Any sale of crypto under the one year period is considered short term and is taxed at your marginal tax rate.
Mined cryptocurrency is considered income
If you have mined any amount crypto this year, you are required to report those coins as regular income. You should use the fair value market of the coins on the day there were mined. Tools such as CoinMarketCap and CryptoCompare are extremely helpful in finding historical prices.
Spending crypto is the same as selling
Keep in mind that spending crypto for goods and services is also considered a taxable event just like selling. For your report, you will need to know the fair market value of the coin at the time you purchased something with crypto to make sure your tax report is accurate.
You must make a good faith effort to claim your crypto and pay your taxes
It is much better to make a mistake on your crypto taxes and owe a fee than to hide your holdings and face tax evasion charges. Remember to be consistent in your methodology for calculating gains and keep solid records of all trades throughout the year.
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You are right. If we pay tax for crypto income, there is a high chance that govenments will accept cryptos.