📝 Description
In the United States, the tax administration (the IRS - Internal Revenue Service) considers cryptocurrencies as property and not as currency. Consequently, general capital gains tax rules apply very strictly.
The American system is distinguished by a major difference in taxation based on the holding period of your assets. This guide explains the US legislation for individuals and how to set up your Waltio account to generate a compliant report.
Essential Crypto Tax Facts in the USA
Category | Tax Rule |
Short-term gains (< 1 year) | Taxed as ordinary income (from 10% to 37%) |
Long-term gains (> 1 year) | Favorable capital gains rates (0%, 15%, or 20%) |
Crypto-to-Crypto Swaps | Taxable (Considered a disposal) |
Passive Income (Staking...) | Taxable upon receipt (Ordinary income) |
Filing Deadline | April 15 of the following year |
Calculation and Tax Rates: The Importance of Timing
The IRS makes a fundamental distinction based on the amount of time you held your cryptocurrencies before selling or exchanging them:
Short-Term Capital Gains (One year or less): If you sell a crypto held for 365 days or less, the net profit is added to your usual income (like your salary). It will be taxed according to your federal income tax bracket (ranging from 10% to 37%).
Long-Term Capital Gains (More than one year): If you sell a crypto held for more than one year, you benefit from much more favorable tax rates (0%, 15%, or 20%, depending on your total income).
Loss Deduction: In the USA, you can use your crypto losses to offset your crypto gains. If your losses exceed your gains, you can use up to $3,000 of these losses to reduce your ordinary income (salary) for the year. The remaining losses can be carried forward to future years indefinitely.
🔄 Crypto-to-Crypto Operations (Trading)
The IRS is very clear on this point: exchanging one cryptocurrency for another (for example, selling Bitcoin to buy Ethereum) is a taxable event. This is equivalent to selling your Bitcoin for dollars (which triggers the capital gain calculation) and then using those dollars to buy Ethereum.
⚙️ How are they managed on Waltio?
Great news: Waltio's behavior is perfectly aligned with IRS requirements. The software automatically considers each Crypto-to-Crypto exchange operation as taxable and calculates the capital gain or loss realized at the exact second of the swap.
Your Action: You have no manual action to perform on these operations. The calculation engine (which uses FIFO by default, a method accepted by the IRS) will process your trades exactly as required by US law.
🎁 Passive Income (Staking, Mining, Airdrops)
According to IRS guidelines, income from mining, staking, or tokens received during an airdrop is considered ordinary income. They are taxable in the year of receipt, and their tax value corresponds to the Fair Market Value in dollars at the precise moment you gain control over them.
⚙️ How are they managed on Waltio?
To ensure smoothness in global tracking, Waltio applies a specific default methodology:
This income is marked as non-taxable upon receipt.
The software assigns them an acquisition value of $0.
Practical consequence: Taxation is deferred. It is only when you sell these tokens that the operation becomes taxable. The entire amount of the disposal will then be considered a capital gain.
For taxation to be accounted for upon receipt (Strict IRS Compliance): To scrupulously respect the immediate reporting required by the IRS for passive income, a manual step is required on Waltio. You will need to individually modify each passive gain transaction to enter its acquisition price (the token's market price on the exact day of receipt). This way, the acquisition value will no longer be 0, and the operation will be recorded as income to be declared for the current year. This value will then become your "cost basis" for future resale.
✅ What Triggers Tax (Crypto ➔ Fiat)
Any "disposition" of your cryptocurrencies triggers capital gains tax (short or long term):
Sale for currency: Converting your cryptos into US Dollars (USD).
Purchase of a good or service: Using your cryptocurrencies to buy a coffee, a car, or pay for a service is considered by the IRS as a sale of assets.
As soon as a transaction corresponds to an exit, Waltio automatically calculates the profit generated.
📝 Filing: The Timeline and Forms
Tax Period: Calendar year (January 1 to December 31).
Required Forms:
Form 8949 (Sales and Other Dispositions of Capital Assets) to list each individual transaction.
Schedule D (Form 1040) to summarize total capital gains and losses.
Schedule 1 or Schedule C for mining/staking income.
The Famous Question: On the first page of Form 1040, the IRS explicitly asks every taxpayer to check "Yes" or "No" to the question asking if they received, sold, exchanged, or disposed of digital assets during the year.
Deadline: April 15 of the following year (Tax Day).
Disclaimer: This guide is provided for purely informational and educational purposes. Legislation surrounding digital assets is complex and can evolve (notably concerning specific rules like the "Wash Sale Rule"). Waltio does not provide tax or legal advice. We strongly recommend consulting a CPA (Certified Public Accountant) specialized in cryptocurrencies in the United States to validate your filing.