The cryptocurrency tax calculator USA is an easy online tool to estimate your taxes on short term capital gains and long term capital gains. The calculator is based on the principle of taxation enumerated by the IRS in the latest notice. As per the IRS cryptocurrency or any virtual digital transactions are taxable by law just like transactions in any other property, if you gained in crypto trades, must pay tax on cryptocurrency gains.
Cryptocurrency tax calculator
This free crypto tax calculator built for you readers is for estimation purposes. Please consult your tax attorney or crypto advisor CPAs.The Cryptocurrency Tax Calculator is based on capital gains rate for for tax year 2021 and 2022
Is NFT cryptocurrency ?
The 2022 tax guidance by the IRS changed the wording cryptocurrency to “digital asset ” . IRS also explicitly references NFTs in the new tax form 1040 . In the guidance note IRS provides that receiving digital assets as a payment or as a reward, through mining or staking, through a hard fork, or selling them, and transferring them as gifts shall have implication of capital gains.
Crypto capital gains tax calculator
IRS FAQs on Crypto Tax holds cryptocurrencies as property . IRS has answered the question “How is virtual currency treated for federal tax purposes?“ or ” How is crypto tax calculated? ” in following words :
Virtual currency is treated as property and general tax principles applicable to property transactions apply to transactions using virtual currency. For more information on the tax treatment of virtual currency, see Notice 2014-21. For more information on the tax treatment of property transactions, see Publication 544, Sales and Other Dispositions of Assets.
Since the cryptocurrency holdings are defined as “property” for tax purposes, all the taxation rules for capital gains taxes of any other assets you own, like stocks or gold or real estate also applies to a cryptocurrency transaction.
Rate of taxes for crypto gains
A person can have two kinds of capital gains. Short term capital gains if the cryptocurrency was transferred or sold or changed within 12 months of holding. Then the tax rate is applicable to the same rate that normal income is taxed. But if the crypto coins are held for more than 12 months, any gain on the cryptocurrency will be regarded as long term capital gains. The rate of tax is quite low in comparison to tax rate for short term capital gains. The tax rate for tax year 200 is given below :
2022 Tax Rates for Long-Term Capital Gains
| FILING STATUS | 0% | 15% | 20% |
|---|---|---|---|
| Single filer | Up to $41,675 | $41,676 to to $459,750 | Over $459,750 |
| Head of household | Up to $55,800 | $55,801 to $488,500 | Over $488,500 |
| Married filing jointly | Up to $83,350 | $83,351 to $517,200 | Over $517,200 |
| Married filing separately | Up to $41,675 | $41,676 to $258,600 | Over $258,600 |
Cryptocurrency tax reporting to IRS
Since gains on sale or exchange or trade is regarded as a transfer of property giving rise to capital gains, that must be reported on your tax return in the same way as you report for any other property or capital asset.The crypto tax reporting may arise when
- You sell cryptocurrency for fiat money (USD, EUR, JPY, etc.) or
- You exchange for another crypto coin or
- Use your cryptocurrency holding to buy a good or services
Regardless of how you have earned cryptocurrency, you’ll need to record the value of the crypto in U.S. dollars when it’s received and report that income on your tax return. For example, you may receive the payment for freelancing in crypto coins or you may earn Bitcoin or Solana or ADA by mining new coins or receiving coins or tokens as a reward for certain activities. All these gains, although in a virtual currency form is still your incom very much taxable . Threfore , you need to report it.
Tax form 1099-B applies to the year 2023
The latest bill – $1.2 trillion bipartisan infrastructure bill, signed into law by President Biden last November, requires cryptocurrency exchanges to issue a Form 1099-B. In other words, crypto exchanges will be required to notify the IRS directly of crypto transactions. The bill for the 1099-B forms applies to the 2023 tax year. For 2021 and 2022 tax years, you’re not going to get a 1099-B.
What are ways of paying crypto taxes?
Once you used our cryptocurrency tax calculator and computed the tax , you need to pay it to IRS. There is no special way to pay taxes on cryptocurrency gains. The IRS wants the payment of tax through various ways it allows taxpayers to pay taxes. You can use any of several options given below to pay the tax owed by you on the cryptocurrency capital gains
- Electronic Funds Withdrawal. Pay using your bank account when you e-file your return.
- Direct Pay. Pay directly from a checking or savings account for free.
- Credit or debit cards. Pay your taxes by debit or credit card online, by phone, or with a mobile device.
- Pay with cash. You can make a cash payment at a participating retail partner. Visit IRS.gov/paywithcash for instructions.
The tax on crypto earnings by sale or exchange or trade are taxed as capital gains . The best Cryptocurrency Tax Calculator gives you a rough estimate. So once you compute the estimated tax on crypto gains, it is better to consult your cryptocurrency tax advisor !
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