Which Taxes Apply?
Cryptocurrency is an example of “convertible virtual currency” as it can be digitally traded between users and purchased or exchanged into US Dollars and other real/virtual currencies. The sale, exchange, or use of any convertible virtual currency to pay for goods or services in a real-world transaction has tax consequences.
In the US, most cryptocurrency taxes fall into two categories: capital gains and ordinary income.
Disposal/Activity Type
Capital Gains Tax
Ordinary Income Tax
✅
❌
✅
❌
✅
❌
❌ (If conditions met)
❌
❌
✅
❌
✅
❌
❌
❌
✅
❌
✅
❌
✅
❌ (Potential to claim capital losses)
❌
❌
✅
✅
❌
✅
✅
❌
❌
❌
✅
❌
✅
❌
✅
❌
❌
✅
✅ (for creators)
❌
✅
❌ (if conditions met)
❌
❌ (if conditions met)
❌
Last updated