Perhaps a few years ago when cryptocurrencies were not regulated and were going under the IRS'radar, Bitcoin had a better appeal to people. Those who mine this cryptocurrency now know that they definitely have to file taxes of every earned Bitcoin they get. If you are a miner who just started in the cryptocurrency world, you should start getting ready for tax season and take prep seriously. Otherwise, the Internal Revenue Service might be out to get you if you ignore your responsibilities. Reporting taxes on any crypto you earn throughout the year is already an obligation and nobody is an exception to this. Perhaps they did not care before but so much income influx due to crypto was eventually going to have an impact and make a statement.
In recent years, the IRS has been putting their people to work on the best approach towards cryptocurrency. People who aren't ready to file their taxes who are miners should beware of the ramifications this entails. If they do not want to lose both money and time reconciling their tax liability, they need to get on that as soon as possible before tax season begins in 2022. What we are doing here is offering you a specific guide on what exactly you need to report to the IRS in regards to your cryptocurrency earnings. We'll give you the details on which crypto activity is reportable, how the IRS taxes it and how you can be ready for it.
Here's what you need to report to the IRS.
First of all, you need to know that the IRS is treating cryptocurrencies as property, this means they will be taxed in similar fashion as stocks get taxed. If for example, you only purcased crypto with US dollars and those assets have only been sitting there in your wallet, there's no need to report anything in 2022. However, you will get taxed by the IRS if you trade one cryptocurrency for another. If you sell crypto for fiat dollars (givernment-issued cryptocurrency). Or also if you use crypto to buy goods or services such as paying for coffee with your own crypto.