WHAT YOU NEED TO KNOW ABOUT CRYPTOCURRENCY AND TAXES

If you owned any Bitcoin (or any other popular cryptocurrency) in 2017 you probably made a bunch of money. Now, with tax season on the horizon, you may be wondering how all that digital currency will affect your taxes.

The Verge has a detailed guide on how to handle your 2017 taxes when it comes to Bitcoin. Here are a few key takeaways from the article to help you through the process.

Who Needs to Pay Taxes on Cryptocurrencies?
If you bought a bunch of Bitcoin when it was cheap and you’re still holding onto it, then you’re in luck. The Internal Revenue Service doesn’t tax cryptocurrency holdings that have increased in value. You only have to worry about taxes if you sold your digital currency or used it to buy something else.

Any cryptocurrency you mined can also be taxed. The same thing applies to any coins you got from the Bitcoin fork in August 2017, though the IRS still hasn’t cleared up exactly how that will work.

Here’s a chart from The Verge that should help you figure out how your cryptocurrency earnings will be taxed.

How to Pay Your Cryptocurrency Taxes
The first thing you’ll need to do is create a record of all your cryptocurrency transactions. Some digital currency exchanges, like CoinBase, will actually send you a 1099 form, but only if you sold at least $20,000 in currency in at least 200 seperate transactions.

Otherwise, you’ll have to find your own records, though most of them should be publicly available thanks to the blockchain. Then download all your transactions as CSV files.

You’ll also need to calculate exactly how much each transaction was worth in U.S. dollars at the time of sale, which isn’t easy considering how volatile cryptocurrencies can be. Thankfully, there are plenty of sites that can show you the value of Bitcoin and other coins on any day in the past. CoinDesk is a good place to start, with charts for Bitcoin, Ethereum, Bitcoin Cash, Litecoin, and Ripple.