Cryptocurrency Must Be Reportable On Your Tax Return

As tax season approaches, investors who have engaged in cryptocurrency purchasing or trading may have more IRS papers to fill out this year than normal.

Many, but not all, bitcoin, ethereum, and other digital currency transactions must be disclosed to the federal government. As a result, some cryptocurrency newcomers are unsure how to prepare their taxes.

Here's what you need to know about bitcoin taxes and how to report them.

First and foremost, if you used regular US money to purchase cryptocurrency assets that have stayed in an exchange or cryptocurrency wallet, you can relax because you do not have a tax burden and no reporting is necessary.

But the Internal Revenue Service does require U.S. residents to report the following crypto events, which are considered taxable:

• You hold assets in cryptocurrency and used crypto to buy a good or service

• You sold or cashed your crypto assets for government-issued currency

• You traded one cryptocurrency for another

• Your employer paid you in cryptocurrency

• You were given free tokens through an airdrop

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