As you probably already know, virtual money is considered real property by the IRS. So, if you are one of those adventurous people who “mine” virtual currencies, you should understand that the Internal Revenue Service requires reporting of profits and losses.
It gets better:
Because cryptocurrencies are now considered valid, like the US dollar and other FOREX investment tools, it qualifies for traditional write-offs and exemptions.
But there is a catch:
The one caution involved with cryptocurrency reporting is that it must be converted accurately into US dollars. This could require an extra bit of research and seeking help on your part.
Why do we stress the importance of hiring an excellent accountant?
Because, excellent accountants and taxation code specialists can show you how to accurately convert any cryptocurrency. They can also inform you about loopholes and other advantages when it’s time to report.
- Filing cryptocurrency as income on employee payroll forms.
- Evaluating if your virtual income is below the taxing minimum of $600.
- Write-offs for making donations to charities using virtual money. This is especially advantageous with the formation of new charities like Hurricane Harvey and Hurricane Irma relief funds.
- Write-offs for using virtual currency as a retirement savings contribution.
- Using virtual currency to pay for entrepreneurial expenses.
- Possibilities of using virtual money loses in the same way as traditional income losses.
What’s the bottom line?
To better understand how you should treat virtual currency gains and loses, consult with an expert well ahead of reporting time. They can help you prepare for all debts and questions that the IRS sends your way. Sign up for a free consultation with an IRS mediation specialist to learn more about properly reporting your virtual money success.
The best part: