It’s a grey area but, yes, crypto taxes are a thing.
The IRS may have classified virtual currency as “property” but that doesn’t change the fact that, in some cases, it still falls under the tax code for “income”.
What does that mean for you? Well, it means that your coins are subject to short-term and long-term capital gains. The longer you HODL, the lower your tax rate will be (it’s true). These gains are realized at the moment you sell or convert your coins, which creates a “taxable event”. Additionally, virtual currency that was exchanged for goods or services can be taxable depending on the date you purchased the coin and what the value was when you used it. Suddenly, that pizza doesn’t seem so appetizing.
But hey, if you lost money on your crypto, you won’t be subjected to a tax penalty. You still have to file, but at least there’s a small silver lining.
This post originally appeared on the BitTaxer Crypto Tax Blog.