Everytime Bitcoin is bought, sold or traded exist tax impacts. Is important to know how Bitcoins are taxed, the requirements that involve and the tax planning techniques that can prevent you a headache. Some of the important things you must to keep in mind for understanding how it works the taxes on Bitcoins transactions are the records, the meaning of virtual currency and what is the Internal Revenue Service (IRS).
First, the maintenance of your full records, this is completely essential for measuring where your Bitcoins come and doesn’t have troubles in the future. The IRS has ruled Bitcoins and other cryptocurrencies are “treated as property” and not as a currency, these rules implicate some specifications on how bitcoins are taxed and all the information that you need –as an investor- for making sure your taxes calculation are correct and even techniques to minimize them.
Essentially, virtual currencies are considered property so they must be taxed, secondly, it doesn’t matter how you spend it: incomes are taxable. Likewise, virtual currency is two transactions in one that involves disposing the currency and spending the dollar-equivalent amount. But what is a virtual currency? It is nothing more than the value that functions as a medium of exchange represented digitally.
Nevertheless, there are some things established by ISR that you must consider for tax treatment: for federal purposes, virtual currencies are treated as property transactions. In the records, every taxpayer that gets paid with a virtual currency –goods or services- must measure it in US Dollars and every transaction using virtual currencies should be reported in US Dollars.
Finally, some tax tips for casual users is to establish record-keeping systems, keep your eyes the way your Bitcoins move –when you acquire it and when you dispose of them- and guarantee yourself a safe experience.