Do You Have to Pay Taxes on Bitcoin?

By Melissa Finnegan0 Comments

The IRS is sending letters to over 10,000 cryptocurrency owners who may have neglected to pay taxes on the virtual investments or have failed to report income and pay taxes on cryptocurrency transactions.[1]

Some cryptocurrency investors might not be aware of these tax implications when they initially invested in cryptocurrencies such as Bitcoin. The IRS treats cryptocurrencies similar to property for tax reporting purposes.

Cryptocurrency Investing the Tax-Advantaged Way

Like stocks or bonds, any gain or loss from the sale or exchange is subject to short-term or long-term gains tax… unless it’s in an IRA.

If all rules and regulations are followed, IRA funds are either tax-free or tax-deferred depending on the type of self-directed account you’re using to invest. In terms of holding cryptocurrency in an IRA, the need to track individual transactions for tax reporting is eliminated.

With a self-directed Traditional IRA or self-directed Roth IRA at Equity Trust, cryptocurrency investors have the ability to invest in a variety of popular coins, including Bitcoin and Ethereum, within their tax-advantaged account through the Digital Asset Platform.

Investing in Cryptocurrency with Equity Trust’s Digital Asset Platform

Are you one of the 10,000 cryptocurrency owners who might be receiving a letter from the IRS?[2]
Learn more about how holding your crypto in a self-directed IRA might be the tax-advantaged option to potentially help eliminate or defer taxes on your coins.

Prior to making any investment decisions, please consult with the appropriate legal, tax, and/or investment professionals for advice. As a self-directed IRA custodian, Equity Trust Company will not provide investment advice or risk assessment of any investment. The digital currency market may experience a high degree of volatility and clients should consult with an investment professional before any investment is made.