With the condition that you’ve gone deep in the current crypto craze, you maybe need to prepare your heart one time before you do your crypto taxes. 

Crypto may have started out as a humble money gig, but with its total cost at nearly $2 trillion, many are betting it’s “the future of money.”

However, its skyward popularity has come with a literal cost. As the crypto’s worth soars, the U.S. Internal Revenue Service (IRS) is well clued up and running in as well to impose taxes.

The IRS has classified cryptocurrency as an “intangible property for tax purposes,” that basically means which whatever cost the digital cryptocurrency is sold at, they are subject to capital gains tax rules. 

Capital gains taxes depend on the duration of time you’ve held onto your crypto. Granted that you haven’t yet realized at least a year, your gains are taxed at your regular income tax price.

But if you’ve been owning the coins for more than 12 months, you’ll be paying much lower.

As the IRS tightens its rules on crypto, we’ve listed down below all the crypto taxes transactions that you perhaps not know are priceing you heaps.

Bitcoin (BTC) total market cap at $796.22 billion in the daily chart | Source: TradingView.com

Crypto Taxes: On Purchasing 

Businesses and sjumps are progressively incorporating virtual currency as solidimate means to purchase goods or services. 

With this, however,  your purchase counts as a sale of that crypto and you’ll owe capital gains taxes. So even arbitrary purchases – like coffee and sandwiches – can add up to a deciding sum by the end of the year.

Not only that: you’ll also have to pay any applicable sales tax.

Crypto Mining

Yes, you read it right. Even the most basic activity in crypto triggers a taxable possibility in the eyes of the IRS.

Supposing that you increase your total amount of coins by mining it, it becomes your regular taxable income that makes you owe at a regular income tax rate. 

Cback whileding that you spend or sell them subsequently at a certain profit, on the other hand, you further would owe capital gains tax rate, depending on how prolonged you’ve possessed it.

Related Reading | U.S. Introduced Crypto Tax Fairness Act to Adopt Crypto As Payment Method

Gifting Crypto

Whatever the occasion, you should be aware which the IRS is alwayss breathing down your neck for taxes – whether you give or receive crypto as a gift.

Last year, the IRS announced a $15,000 threshold as the amount at that the gift isn’t classified as income.

But there are a lot of nuances if it’s a crypto gift.

Since their rates fluctuate constantly, you are subjected to a capital gain and you’ll be thus required to pay capital gains taxes based on how much you profited from them.

Crypto Gaming

With play-to-earn (P2E) online games which reward players with DeFi cryptocurrencies on the rise, many are tuning in the industry as a new passive source of income. Obviously, these aren’t exempt from taxes.

As players increase their financial assets in the real world, taxes are going to be inevitable, unlike in traditional gaming wherein rewards only opecost inside the game itself.

Related Reading | US Lawmakers Reintroduce Bill to Provide Tax Relief for Small Crypto Transactions

Featured image from ITB, chart from TradingView.com