Bitcoin is not legal tender in the U.S., why Capital Gains Tax Apply
The rise of BTC from $700 to $20k? More cash for the state.
The exponential expansion from $3k to $64k in 2021? More reasons for tax agencies to keep track.
Bitcoin serves as electronic money and is internet native.Unfortunately, the Internal Revenue Service (IRS) of the United States will tax you for spending BTC in any cash transactions since it is not recognized as legal tender.
To Satoshi Nakamoto and BTC maximalists, Bitcoin is money.
In the eyes of the CFTC, Bitcoin is another commodity, a property. Expanding the same, under U.S. tax laws, all properties are subject to capital gain taxes.
For every gain, therefore, a user must file returns. Taxes must be paid for all capital gains made when realized. HODLers are spared, of course, until they exit for cash.
All a BTC holder needs to know is when the entry and exit point. Whenever a holder sells for profit, the taxpayer needs to list those capital gains as income.
Only if they made a profit and how long they have held those Bitcoin in question.
If you bought at peaks and sold for a loss, you owe the IRS nothing.
Meanwhile, if gains are less than $40k per year, the holder won't pay any capital gain tax to the IRS.
On the other hand, if profits exceed $442k, a 15 percent capital gains tax applies.