Personal Finance & Money Asked on September 27, 2021
PayPal had a promotion without fees a long time ago, they also did it December 2020 and I just sold crypto again through paypal. This time they mentioned some sort of tax form, which somehow I was unaware of the previous year. Anyway, last year, 2020, I definitely did NOT file my crypto profits I made in 2019 which I bought a partial part of Ethernum for 40USD and it went up to 86USD when I sold it. I thought I had to make at least a few thousand before I had to pay taxes but after looking it up it seems I have to pay at least a 10% tax on it no matter what. Though I’m not even sure because different sites are telling me different information on cryptocurrency.
What should I do? Is there any site that has good crypto tax information because it’s difficult to find one.
The IRS has a site about virtual currency, including Frequently Asked Questions.
In general, a gain that you make buying and then selling cryptocurrency is subject to capital gains tax. There is no minimum amount of gain that you need before you have to pay tax, but the capital gains tax rate is based on how long you held the asset before you sold it (more or less than a year) and what your total income is, and the rate can go down to 0% under the right circumstances.
If you had a gain from selling cryptocurrency in 2019 that you did not declare and pay tax on, you can amend your 2019 tax return and pay the tax. I don’t know the likelihood that the IRS would learn about that transaction if you don’t tell them.
Correct answer by Ben Miller - Remember Monica on September 27, 2021
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