How to Report and Pay Taxes on Cryptocurrency
Order ID |
53563633773 |
Type |
Essay |
Writer Level |
Masters |
Style |
APA |
Sources/References |
4 |
Perfect Number of Pages to Order |
5-10 Pages |
Description/Paper Instructions
How to Report and Pay Taxes on Cryptocurrency
Cryptocurrency is a digital or virtual currency that uses cryptography to secure its transactions and to control the creation of new units. With the rise of cryptocurrencies, many individuals are now investing in and trading these digital assets.
However, it’s important to understand that cryptocurrency is subject to federal income tax and that the IRS considers it to be a type of property for tax purposes. As such, cryptocurrency must be reported and taxed appropriately.
Here are the steps to report and pay taxes on cryptocurrency:
- Keep detailed records of all cryptocurrency transactions: This includes the date of each transaction, the type of cryptocurrency involved, the amount of cryptocurrency involved, and the USD value of the cryptocurrency at the time of the transaction.
- Report cryptocurrency transactions on your tax return: All cryptocurrency transactions must be reported on your federal income tax return. If you sold or traded cryptocurrency, you must report the gain or loss on your tax return. If you received cryptocurrency as payment for goods or services, you must report the income on your tax return.
- Determine the cost basis: The cost basis of a cryptocurrency is the cost of acquiring it, including any fees or commissions associated with the transaction. The cost basis is used to determine the gain or loss on the sale or exchange of the cryptocurrency.
- Determine the holding period: The holding period is the length of time that the cryptocurrency was held. If the cryptocurrency was held for one year or less, the gain or loss is considered a short-term capital gain or loss. If the cryptocurrency was held for more than one year, the gain or loss is considered a long-term capital gain or loss.
- Report the gain or loss on Form 8949: If you sold or traded cryptocurrency, you must report the gain or loss on Form 8949, Sales and Other Dispositions of Capital Assets. You must also attach Form 8949 to your tax return.
- Pay the appropriate tax: If you have a gain from the sale or trade of cryptocurrency, you may owe federal income tax on the gain. The tax rate will depend on your marginal tax rate and the holding period of the cryptocurrency. If you have a loss from the sale or trade of cryptocurrency, you may be able to use the loss to offset other capital gains or to reduce your taxable income.
- File your tax return: Make sure to include all of the necessary forms and schedules with your tax return, including Form 8949 if you sold or traded cryptocurrency.
In addition to federal income tax, cryptocurrency may also be subject to state and local taxes, as well as taxes in foreign countries. It’s important to understand the tax laws in your jurisdiction and to comply with all applicable tax laws.
Conclusion: Cryptocurrency is a type of property for tax purposes, and it must be reported and taxed appropriately. To report and pay taxes on cryptocurrency, you must keep detailed records of all transactions, determine the cost basis and holding period, report the gain or loss on Form 8949, pay the appropriate tax, and file your tax return. It’s important to understand the tax laws in your jurisdiction and to comply with all applicable tax laws.
RUBRIC
QUALITY OF RESPONSE |
NO RESPONSE |
POOR / UNSATISFACTORY |
SATISFACTORY |
GOOD |
EXCELLENT |
Content (worth a maximum of 50% of the total points) |
Zero points: Student failed to submit the final paper. |
20 points out of 50: The essay illustrates poor understanding of the relevant material by failing to address or incorrectly addressing the relevant content; failing to identify or inaccurately explaining/defining key concepts/ideas; ignoring or incorrectly explaining key points/claims and the reasoning behind them; and/or incorrectly or inappropriately using terminology; and elements of the response are lacking. |
30 points out of 50: The essay illustrates a rudimentary understanding of the relevant material by mentioning but not full explaining the relevant content; identifying some of the key concepts/ideas though failing to fully or accurately explain many of them; using terminology, though sometimes inaccurately or inappropriately; and/or incorporating some key claims/points but failing to explain the reasoning behind them or doing so inaccurately. Elements of the required response may also be lacking. |
40 points out of 50: The essay illustrates solid understanding of the relevant material by correctly addressing most of the relevant content; identifying and explaining most of the key concepts/ideas; using correct terminology; explaining the reasoning behind most of the key points/claims; and/or where necessary or useful, substantiating some points with accurate examples. The answer is complete. |
50 points: The essay illustrates exemplary understanding of the relevant material by thoroughly and correctly addressing the relevant content; identifying and explaining all of the key concepts/ideas; using correct terminology explaining the reasoning behind key points/claims and substantiating, as necessary/useful, points with several accurate and illuminating examples. No aspects of the required answer are missing. |
Use of Sources (worth a maximum of 20% of the total points). |
Zero points: Student failed to include citations and/or references. Or the student failed to submit a final paper. |
5 out 20 points: Sources are seldom cited to support statements and/or format of citations are not recognizable as APA 6th Edition format. There are major errors in the formation of the references and citations. And/or there is a major reliance on highly questionable. The Student fails to provide an adequate synthesis of research collected for the paper. |
10 out 20 points: References to scholarly sources are occasionally given; many statements seem unsubstantiated. Frequent errors in APA 6th Edition format, leaving the reader confused about the source of the information. There are significant errors of the formation in the references and citations. And/or there is a significant use of highly questionable sources. |
15 out 20 points: Credible Scholarly sources are used effectively support claims and are, for the most part, clear and fairly represented. APA 6th Edition is used with only a few minor errors. There are minor errors in reference and/or citations. And/or there is some use of questionable sources. |
20 points: Credible scholarly sources are used to give compelling evidence to support claims and are clearly and fairly represented. APA 6th Edition format is used accurately and consistently. The student uses above the maximum required references in the development of the assignment. |
Grammar (worth maximum of 20% of total points) |
Zero points: Student failed to submit the final paper. |
5 points out of 20: The paper does not communicate ideas/points clearly due to inappropriate use of terminology and vague language; thoughts and sentences are disjointed or incomprehensible; organization lacking; and/or numerous grammatical, spelling/punctuation errors |
10 points out 20: The paper is often unclear and difficult to follow due to some inappropriate terminology and/or vague language; ideas may be fragmented, wandering and/or repetitive; poor organization; and/or some grammatical, spelling, punctuation errors |
15 points out of 20: The paper is mostly clear as a result of appropriate use of terminology and minimal vagueness; no tangents and no repetition; fairly good organization; almost perfect grammar, spelling, punctuation, and word usage. |
20 points: The paper is clear, concise, and a pleasure to read as a result of appropriate and precise use of terminology; total coherence of thoughts and presentation and logical organization; and the essay is error free. |
Structure of the Paper (worth 10% of total points) |
Zero points: Student failed to submit the final paper. |
3 points out of 10: Student needs to develop better formatting skills. The paper omits significant structural elements required for and APA 6th edition paper. Formatting of the paper has major flaws. The paper does not conform to APA 6th edition requirements whatsoever. |
5 points out of 10: Appearance of final paper demonstrates the student’s limited ability to format the paper. There are significant errors in formatting and/or the total omission of major components of an APA 6th edition paper. They can include the omission of the cover page, abstract, and page numbers. Additionally the page has major formatting issues with spacing or paragraph formation. Font size might not conform to size requirements. The student also significantly writes too large or too short of and paper |
7 points out of 10: Research paper presents an above-average use of formatting skills. The paper has slight errors within the paper. This can include small errors or omissions with the cover page, abstract, page number, and headers. There could be also slight formatting issues with the document spacing or the font Additionally the paper might slightly exceed or undershoot the specific number of required written pages for the assignment. |
10 points: Student provides a high-caliber, formatted paper. This includes an APA 6th edition cover page, abstract, page number, headers and is double spaced in 12’ Times Roman Font. Additionally, the paper conforms to the specific number of required written pages and neither goes over or under the specified length of the paper. |
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How to Report and Pay Taxes on Cryptocurrency
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