Do I have to pay tax on Bitcoin?

In general, you’ll pay either Capital Gains Tax or Income Tax on Bitcoin - depending on the type of transaction. If you’re selling BTC for fiat currency, trading BTC for another cryptocurrency or spending BTC on goods and services - you’ll pay Capital Gains Tax on any profit you make from that transaction.

Do you need to report bitcoin transactions to the IRS?

The IRS has made it mandatory to report bitcoin transactions of all kinds, no matter how small in value. Thus, every US taxpayer is required to keep a record of all buying, selling of, investing in, or using bitcoins to pay for goods or services (which the IRS considers bartering).

Is bitcoin a “property” or “currency” for tax purposes?

The Internal Revenue Service (“IRS”) last year issued a notice addressing the tax treatment of Bitcoin. It chose to treat bitcoin as “property” rather than “currency” for tax purposes. In this backgrounder we will look at the classification options the IRS considered, what it chose to do in its notice of March 2014, and why.

What are the tax categories for bitcoin?

Possible tax categories for bitcoin include taxing it as personal property, a commodity, a currency, a security or a debt instrument. Bitcoin has qualities resembling all of these property forms, yet it does not neatly fit any of them.