Bitcoin: how much do you owe in taxes?

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According to Uncle Sam, you owe taxes on Bitcoin whether you have used the cryptocurrency as an investment or as a currency.

This is due to Bitcoin being viewed as property and not a currency. It is seen as you are selling a property, in this case bitcoin, for a cash value and then using said money to buy another product. And so, every purchase you make with the cryptocurrency has to be reported on your taxes.

If you have kept bitcoins for less than a year and then sell them, the cash will be taxed as income. On the other hand, if you have held those bitcoins for more than a year, it will be taxed as a capital gain which could go up to 20%.

The Internal Revenue Service (IRS) could be launching a crackdown on cryptocurrency imminently as the IRS are concerned that cryptocurrency trading is being under-reported.