IRS: Cryptocurrencies Must Be Taxed

The Internal Revenue Service (IRS) – the tax collection agency that administers the US Congress’s Internal Revenue Code – has once again sent a friendly reminder to taxpayers that income earned from cryptocurrency transactions is subject to income tax returns.

TAX EXPERTS WARN

Last Friday, the IRS made a reminder of the tax rules for cryptocurrency transactions on its official site.

The announcement is also available as virtual or digital money. He says that cryptocurrencies, also known as cryptocurrencies, can be legally taxed just like other assets.. Both taxpayers and their regulators are expected to adhere to the principles outlined in the IRS Announcement 2014-21.

The IRS also advises taxpayers that “if the income tax of cryptocurrency transactions is not properly reported, those transactions may be audited, and fines and interest, if appropriate, applicable.”. The IRS announced:

Crimes may include tax evasion and false tax filing. Those found guilty of tax evasion can be imprisoned for up to five years or fined up to $250,000.. Those who file false tax returns can face up to three years in prison and up to $250,000 again.

CRYPTOS ARE A CURRENCY AND CAN BE TAXABLE

Cryptocurrencies are contrary to the names of Bitcoin and other cryptocurrencies. argues that they are not currencies, but the IRS told taxpayers that digital currencies are currencies:

Virtual currencies are, by definition, a digital representation of assets that function the same as a country’s traditional currencies.

However, the IRS is aware that tracking cryptocurrency transactions is quite difficult, especially when compared to traditional fiat currencies.. Still, the organization warns those trying to stay off the radar:

There are 1,500 known cryptocurrencies currently available. Because cryptocurrency transactions are difficult to track and have a supposedly anonymous side, some taxpayers may try to hide their income taxes from the IRS.

In the eyes of tax collectors, cryptocurrencies are only are not digital currencies, they are also properties.. In a statement from the IRS:

Announcement 2014-21 stipulates that virtual currencies are treated as property for US federal tax purposes. General tax principles applied to property transactions can also be applied to virtual currencies.

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