While statistics from the 2017 fiscal year found that 45% of all tax revenue collected in New York City was from property taxes, certain New Yorkers are finding themselves having to pay a new kind of tax. If you’ve held any amount of cryptocurrency during 2017, it’s important that you know how this affects the filing of your taxes this year. Statistics show that the state of New York had an average personal income tax rate for 2017 that ranged from anywhere between 4% to 8.82%. If you’ve been taking part in the world of cryptocurrency, this rate might have become extremely different. With that in mind, here is more information about how the IRS treats three common cryptocurrency actions.
- Being Paid in Cryptocurrency
You might have found that you’ve received a large portion of your income from cryptocurrency. Considering that the value of these currencies often changes, it’s understandable what amount of write down on your tax forms. With that in mind, you’ll want to keep receipts of some kind for any cryptocurrency payments you’ve received. The amount that you’ll pay will be based upon market value of this currency at the time you’ve received payment. Considering that, many people save these receipts in order to have accounting services calculate these totals.
- Spending This Type of Currency
It’s understandable that one of the first things you might want to do with cryptocurrency is to spend it. That being said, you’ll want to know that spending this form of currency is considered a taxable event. For instance, let’s say that you purchased $50 worth of cryptocurrency. Over time, this currency became worth $100 and you purchased goods worth $100 with this currency. This would mean that a taxable gain of $50 has taken place.
- Trading for Other Cryptocurrencies
One of the most popular things people do after obtaining this currency is to trade it. You might think that exchanging cryptocurrencies isn’t taxable considering no purchases are being made. However, the IRS does treat trading of these currencies as an event that causes gains or losses to take place. While you might be under the impression that any kind of trading increases taxes owed which isn’t true. If you’ve traded cryptocurrencies and ended up losing $100, you could likely apply this amount to reduce the amount of taxes you currently owe.
In conclusion, the inclusion of cryptocurrency into this year’s tax code has many understandably wondering what to do. Many people find that they have the best chance at having your taxes involving cryptocurrency filed properly by contacting accountants. You’ll find that accountants offer their services to help ensure that all forms of cryptocurrency holding you’ve engaged in are documented. This allows tax accountants to prepare proper calculations, saving you a lot of time and effort. In turn, you can rest assured that your taxes are completed without having to worry.