March 3, 2022 10:53 pm

Proposal to Exempt Small Crypto Purchases from Tax Reporting

The IRS treats cryptocurrency as property. This means when your Bitcoin or other digital asset is used to make a purchase, you have to figure gain or loss on the transaction. You can’t duck this responsibility because you are required to note on the first page of the tax return whether you received, sold, exchanged, or otherwise disposed of any financial interest in any virtual currency during the year. A new bipartisan bill, called the Virtual Currency Tax Fairness Act of 2022 (H.R. 6582), would exempt from reporting any transactions under $200. For example, if you use virtual currency to buy your morning coffee, you won’t have to report this as a taxable sale. If enacted, it would apply to transactions after December 31, 2021.

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Tax Glossary

Earned income

Compensation for performing personal services. You must have earned income for a deductible IRA or to claim the earned income credit.

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