I don’t use crypto regularly but needed to buy something online, and they asked for payment in crypto. My question is, if I bought the crypto and sent it within minutes, is that a taxable event? Do I need to report this on my taxes?
Thanks!
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No, the crypto itself isn’t taxable—only if there’s a gain on it.
Hal said:
No, the crypto itself isn’t taxable—only if there’s a gain on it.
That’s what I was thinking too, but I’ve never used crypto before, so I just wanted to make sure before making a purchase. Thanks!
@Finley
Actually, if the value of the crypto increased between when you bought it and when you spent it, you’ll owe tax on that gain, even if it’s small.
EmmanuelBrown said:
@Finley
Actually, if the value of the crypto increased between when you bought it and when you spent it, you’ll owe tax on that gain, even if it’s small.
Yeah, looks like you’re right. Thanks for clearing that up!
Yes, it’s a taxable event. Any gain or loss between when you bought and sent the crypto needs to be reported.
Griff said:
Yes, it’s a taxable event. Any gain or loss between when you bought and sent the crypto needs to be reported.
Thanks for the clarification, appreciate it!
It depends on where you’re located. What country are you in?
Nathan said:
It depends on where you’re located. What country are you in?
Sorry, I should have mentioned—I’m in the US.
Nathan said:
It depends on where you’re located. What country are you in?
Sorry, I should have mentioned—I’m in the US.
In the US, any change in the price of crypto between when you buy it and when you use it is a taxable event. But practically, if there’s only a tiny gain or loss, the IRS probably won’t care or notice. Just keep in mind that it’s wiser to move crypto to a personal wallet before spending it for better privacy and control.
Check out Green Wallet for secure transactions: Blockstream Green: Simple and secure Bitcoin wallet and this video: https://www.youtube.com/watch?v=DesN85bWmGA. If the merchant supports the Lightning network, that’s even better for avoiding high fees and gaining extra privacy: https://www.youtube.com/watch?v=QtMXsJxx1X0.
@Nathan
Thanks for explaining that! I’ll look into Green Wallet and those videos.
Yes, in the US, using Bitcoin to make purchases is a taxable event. You’ll need to report capital gains or losses.
zabin said:
Yes, in the US, using Bitcoin to make purchases is a taxable event. You’ll need to report capital gains or losses.
Thanks for the info!
Most places tax crypto from the time you buy it to the time you sell or use it. If the seller has set the price in BTC, I’m not sure how that works exactly. It’s going to get tricky when things start being priced solely in crypto, like a price tag showing 0.05 BTC instead of the equivalent in USD. Governments aren’t ready for that shift yet, but they’ll find a way to tax it since Bitcoin is fully traceable.
I won’t tell if you don’t. 