If you’re like millions of Americans, you may have discovered trading cryptocurrencies can be fun and, if you’re lucky, profitable. Figuring out how to pay your taxes on all those profits? That’s a different story.
In the past decade, crypto has exploded in popularity, and is now a trillion-dollar class of assets, even on a bad day. But the taxman has been taking notice too.
In the eyes of the IRS, trading bitcoin and other coins is basically like trading a stock, bond or parcel of real estate. In other words, if you buy bitcoin, and it climbs in value, the IRS considers your profit a capital gain—and may want to claim its share.