Do I Have to Pay Taxes Moving Between Crypto Currencies?

do i have to pay taxes moving between crypto currencies

Moving crypto between wallets you own is not subject to tax, while selling or giving away your cryptocurrency can be seen as a sale/conversion and may necessitate tax payments due to how the IRS views cryptocurrencies as property subject to capital gains taxes in most instances.

Depending on where you reside in the US, when selling or exchanging cryptocurrency for fiat currency such as USD it can be considered a taxable event and must be reported and capital gains taxes paid accordingly. Cashing out cryptocurrency to another cryptocurrency exchange also counts as an event subject to taxes.

An exception would be when trading between cryptocurrency and fiat currency on an exchange that does not require KYC – in such a situation you should convert back to USD before filing your taxes. Reinvesting your crypto assets still needs to be reported and any applicable capital gains taxes paid;

If you exchange one cryptocurrency for another cryptocurrency and then hold onto it for at least 365 days, this would be considered long term holding. Tax payments would depend on whether the price increased (leading to capital gain) or decreased (resulting in capital loss). To determine this accurately, know your cost basis (what you paid for your crypto) and compare that against current price of crypto when selling (known as the HIFO method of calculation).

Typically when selling cryptocurrency for a profit, capital gains taxes will apply on the difference between its current price and your cost basis. The IRS treats cryptocurrencies like real property; therefore any increase in value is subject to capital gains taxes. On the other hand, selling it at less than you paid may result in a capital loss without incurring taxes at all.

Even though it can seem complicated, keeping track of crypto transactions is actually relatively straightforward when using CoinTracking. This tool pulls data from various sources – exchanges and wallets alike – and automatically calculates tax liabilities incurred from your transactions. By using it you’ll avoid mistakes while remaining compliant with all crypto tax obligations.

Are You Wondering, “Will I Need to Pay Taxes When Switching Crypto Currencies?” Let Us Know Below And We Will Answer. This website’s information should not be taken as tax, legal or accounting advice and should always be discussed with a professional prior to taking any decisions based on it. While every effort has been taken to keep its content accurate and up-to-date we cannot guarantee its continued accuracy or timeliness.

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