The IRS considers cryptocurrency holdings to be “property” for tax purposes, which means your virtual currency is taxed in the same way as any other assets you own, like stocks or gold. For most people who buy and trade crypto within online exchanges, accounting for it in your tax return is relatively easy. However, the difficulty comes with calculating your basis and properly tracking gains. At Carter & Company International our team of Crypto Tax Experts helps to track your basis by utilizing our internal crypto basis tracking software.
Despite how you may view it or use it, the IRS says for tax purposes, bitcoin and other digital currencies are not currency; they're capital assets, which means they're taxed like stocks. The IRS considers crypto to be property, not income, which means you have to declare existing crypto on your tax return when you withdraw it from your account, sell it, or trade it. Otherwise, you don't have to pay capital gains tax on crypto if you don't do anything with it.