Hello My Steemain Friends ,

Dear friends, I am @aviral123 from India. How are you all, I hope you all are well. I am fine too . Today I am sharing my post with you in this community. Today I will share with you "Taxation On Cryptocurrency:". I want to share my thoughts about this with you all. let's start

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Today many types of virtual currencies have established their name in the world of digital currency. Like Ethereum, Bitcoin, Ripple etc. Similarly, cryptocurrency is also a digital currency for making transactions. This currency operates without any intermediaries such as banks, financial institutions or central authorities.

Nowadays, many users have been attracted to investing and trading in cryptocurrencies. Cryptos and NFTs were divided into classes known as “Virtual Digital Assets”. There are many types of crypto assets, including NFTs, tokens, and cryptocurrencies, that will not be included in gift cards or vouchers.

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Now let us understand whether digital currencies i.e. cryptocurrencies are taxable. How are cryptocurrencies taxed?

• If a user sells or uses his cryptocurrency in any transaction, he pays tax on the cryptocurrency.

*If a cryptocurrency is successfully mined by a user or awarded a reward for work done on the blockchain, it is taxed as ordinary income.

• If a user uses cryptocurrency to make payments for a business, that business is also taxed as income.

• When cryptocurrency is used as payment for any type of transaction. And if the value of cryptocurrency increases at that time, then the profit arising from it is also taxed.

Thus, crypto taxes work similarly to other asset taxes. When cryptos are used and gains are realized they create taxable events for owners.

Redeeming Cryptocurrencies

When exchanging your crypto to receive cash, the cost basis is subtracted from the fair market value of the crypto at the time of the transaction to obtain the capital gain or loss.
In this situation if the user receives profit then it is taxable amount and if loss is received then it is reportable amount.

Cryptocurrency staking

If the user holds cryptocurrencies belonging to a blockchain that uses staking, the user must pay income tax on any rewards he or she receives. Staking is simply defined as when you lock your cryptocurrency on the blockchain as collateral to become a transaction validator and get paid for it.

Cryptocurrency Tax Reporting

To be accurate when reporting taxes of any kind, you will need to be somewhat more organized and vigilant throughout the year than someone who does not own cryptocurrency.
For example, you need to keep track of how each cryptocurrency transaction you make, log the amount you spend and its market value at the time of use so you can report it at tax time.

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The amount of tax payable on crypto depends on the user's tax status, income, and the circumstances in which the user acquired or used their cryptocurrency.

Conclusion

So we learned how cryptocurrency taxes are complicated. Because these include both income and capital gains taxes. If we have to transact or exchange one cryptocurrency to another digital currency, then it is taxed and the rewards are also taxed. Profits from payments made through any cryptocurrency are also taxable. Therefore the user should act thoughtfully.

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