Tax season can be confusing enough with complicated rules about what types of income are taxable and which are not; what can be written off and what can’t; and which assets need to be listed and which do not. Add to that the confusion around digital currency and its status in the eyes of governments, and there are bound to be questions about how Bitcoin relates to taxes. In the United States, for example, “taxable income” encompasses anything received as payment for goods and services. There is no reason that this would exclude payment in bitcoin. Bitcoin received from another person in the exchange counts as gross income, which is subject to income tax. Bitcoin earned through trade or by running a bitcoin exchange could fall under the “capital gains” category, like gold, and will be taxed. Bitcoins that are mined are counted as income received from the act of mining and are taxable with the expenses accrued (such as computing power) being deductible. When miners s...
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