Cryptocurrency Tax Implications

I am currently employed at an accounting firm that handles a lot of people's taxes. I am also, like a lot of you, highly interested in cryptocurrencies. I am also a finance major and look forward to a career in investing and trading. I have been doing a little bit of poking around and have a little bit of advice.

Currently there are no regulations on the exchanges happening on Cryptocurrency exchange sites. But that will not be the case for long. As we've seen with China regulations by governemnts are a real concern. And our government is no different. not only are they cooking up a new currency that will be backed by the U.S. dollar in hopes to undercut the market, they are also working on regulations to control the trade and exchange of cryptocurrencies.

Trading and selling crypto is a taxable event. it counts as regular income, for now. This means that when you trade a currency the value of your loss or gain will count for or against your income. So make sure you are paying attention to how much you are making and be ready for the IRS to eventually take a bite.

That's not to say there isn't good news on the horizon. I also do transcription work and was transcribing a lecture by a professor of accounting. He was speaking about like-kind exchanges, which is when you trade items of equal or similar value. Like-kind exchanges do not fall into the income category. He was proposing this idea to higher ups. This gives me hope that the government will see that not every transaction need be monitored but only the ones that net a gain in U.S. dollars.

For now though my advice is to be careful and attentive to how much you are making and always save a little to the side in case Uncle Sam comes knocking for his cut.