Bitcoin.Tax helps people from all over the world calculate the capital gains they have made on their cryptrocurrency trades. This guide will outline some of the important things you should know about how cryptocurrency taxation is handled in your country. This guide is meant to be informative, but should not be considered financial advice — please always confer with a tax professional about tax-related questions.

* This guide uses “Bitcoin” interchangeably with the phrase “Cryptocurrency”

United States

Classification

In the United States, Bitcoin is classified as a decentralized virtual currency by the U.S. Treasury and as a commodity by the US Commodity Futures Trading Commission (CFTC). The IRS classifies Bitcoin as a property, which is the most relevant classification when it comes to figuring out your cryptocurrency gains and losses.

Calculation: Capital Gain = (Proceed) — (Cost Basis)

Proceed refers to how much your coin was worth at the time of it’s sale.

Cost Basis refers to how much your coin cost to acquire.

Example: If you purchase 1 BTC for $10,000 USD (your cost basis) and sell it for $15,000 USD (proceed), your capital gain would be $5,000 USD ($15,000 — $10,000).

Taxation

Capital Gains are taxed by the IRS based on two factors: how long the property was owned before selling (long-term vs short-term), and your income.

Long-Term refers to more than 1 year.

Long-Term Tax Rates: 0%, 15%, or 20% [dependent on income]

Short-Term refers to less than 1 year.

Short-Term Tax Rates: 10%, 12%, 22%, 24%, 32%, 35%, or 37% [dependent on income and filing status]

*2017 & 2018 Tax Bracket Calculator

*2018 Long-Term Capital Gains Tax Bracket Information

Important Dates

The United States Tax Year runs from JANUARY to DECEMBER

Tax Year 2017 Dates:

Filing Deadline = April 17th, 2018.

Last day to e-file federal tax return and last day to file individual tax returns for 2017 = October 15th, 2018.

Tax Year 2018 Dates: TBA

*Additional Dates & Deadlines

Additional Information:

The 2018 Tax Plan clarifies that cryptocurrency can no longer be calculated using like-kind. Bitcoin.Tax allows like-kind calculation for US-based accounts for 2017 and all years prior.

Property gains are typically calculated using the FIFO (First In First Out) method, and that is the default method used on Bitcoin.Tax for US-based accounts.*