Determining what transactions are considered taxable events for cryptocurrency can be complex.
The following are examples of transactions that would be considered taxable events:
- Selling your cryptocurrency for fiat money such as USD
- Exchanging your cryptocurrency for another type of cryptocurrency or digital asset
- Paying for goods or services with cryptocurrency
- Receiving compensation in cryptocurrency
- Earning staking rewards in cryptocurrency
- Receiving an airdrop in cryptocurrency
What isn’t a Taxable Event?
It’s also important to understand what isn’t taxable.
The following are the most common types of scenarios that aren’t taxable events:
- Purchasing cryptocurrency with fiat
- Transferring cryptocurrency from one of your personal wallets to another personal wallets
- Making donations of crypto to a registered charitable or non-profit organization
- Gifting crypto up to $15,000 per donee or recipient
The IRS issued Notice 2014-21 to help guide individuals and businesses on the corresponding tax treatment involved when transacting in cryptocurrency.
Uphold does not offer tax advice and we recommend you discuss your tax situation with a tax advisor.