Bitcoin is taxed as property, not a currency. So on a basic level, it's taxed as capital gains (you can also book losses of course if the price moves against you). Exceptions here would be if you were paid in BTW for services you performed (that's ordinary income), or if you mined them (truthfully I'm still not sure how it's treated in this case).
You're taxed when you turn BTC into something - cash, a purchase item, etc. You aren't taxed on any unrealized gains or losses.
So if you buy 1 bitcoin for $100, and then sell it for $1,000, you would have to pay capital gains taxes on the $900 of gains.
If you bought one BTC for $100, then decided to use that bitcoin to buy a new TV when BTC was worth $1,000, you would still have to pay the same capital gains tax as the first example.
There are services out there that help you make these calculations and simplify your tax work.
You're taxed when you turn BTC into something - cash, a purchase item, etc. You aren't taxed on any unrealized gains or losses.
So if you buy 1 bitcoin for $100, and then sell it for $1,000, you would have to pay capital gains taxes on the $900 of gains.
If you bought one BTC for $100, then decided to use that bitcoin to buy a new TV when BTC was worth $1,000, you would still have to pay the same capital gains tax as the first example.
There are services out there that help you make these calculations and simplify your tax work.
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