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How Cryptocurrency Gets Taxed
The infrastructure bill makes some changes, but the core treatment is the same
I talked in the last few days about this new Infrastructure bill and what the tax effect will be (video and text version). The answer is that it’s all about the reporting, not the new taxes (see the links down below).
Since most of that was about cryptocurrency, I realized I probably should take a step back and talk about how you actually deal with cryptocurrency and taxes.
High level? Cryptocurrency is an asset like a stock or a bond. Which makes it much harder to deal with than, say, the currencies it’s supposed to replace.
Let’s step through this. I think I’ll do a video to talk it out just to keep the crypto subject rolling.
Mining the currency
When you mine bitcoin or something similar, you are getting something of value, which the IRS defines as income.
Let’s say Bob mines $200 of Dogecoin. Bob will have to report $200 of income on his tax return at year-end.
This $200 will now become the basis in Bob’s Dogecoin.
