Which Taxes Apply?
Last updated
Last updated
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)
❌
🎈 Airdrops
❌
✅
🤝 Staking
❌
✅
❌
❌
❌
✅
❌
✅
❌
✅
❌ (Potential to claim capital losses)
❌
❌
✅
✅
❌
✅
✅
❌
❌
❌
✅
❌
✅
❌
✅
❌
❌
✅
✅ (for creators)
❌
✅
❌ (if conditions met)
❌
❌ (if conditions met)
❌
Forks
Mining
Employment income
Liquidity Pool Rewards
Lending Rewards
NFTs (Non Fungible Tokens)
Spouse Transfers
Gifts