NFT Tax In The US? IRS Shifts Focus From 'Virtual Currency' To 'Digital Assets'

Zinger Key Points
  • NFTs will be subject to the same tax laws as cryptocurrencies and stablecoins in the U.S.
  • The concept of virtual currency in the US tax filing guidelines in the previous year was vague.
NFT Tax In The US? IRS Shifts Focus From 'Virtual Currency' To 'Digital Assets'

All digital assets, including stablecoins, non-fungible tokens (NFTs), and cryptocurrencies, will be subject to the same tax laws in the United States, according to the Internal Revenue Service’s 2022 tax year guide.

The Details: Last year’s IRS guide addressed only the regulations concerning cryptocurrencies and stablecoins, and had used a more restricted phrase: "virtual currencies."

Capital gains tax will now be due and payable by taxpayers who "disposed of any digital asset in 2022" through a sale, exchange, gift or other transfer.

Additionally, anyone who sold any digital asset they had on hand for sale or received NFTs in exchange for services will eventually need to report this revenue to the IRS.

The IRS also worded the document carefully so as to ensure the taxation of any new digital asset class in the future.

According to the agency, “a particular asset has the characteristics of a digital asset, it will be treated as a digital asset for federal income tax purposes.”

IRS Says NFTs Are Not Collectibles: Notably, the IRS decided not to categorize NFTs as "collectibles," which are assets taxed at a different rate than stocks or bonds and include things like collectible art, antiques and diamonds.

In contrast to assets like equities, bonds or cryptocurrency, which are taxed at zero, 15% or 20% depending on the seller's income, collectibles are taxed at a rate of 28% flat.

Also read: Here's What Walmart's CTO Thinks About The Future Of Crypto

High Taxes, Fees For Cryptocurrency: Tax havens for cryptocurrency investors are shrinking globally as more nations define how they will tax digital assets.

In October 2022, Portugal, which was long regarded as a refuge for cryptocurrency investors, enacted a 28% capital gains tax on cryptocurrency gains realized during a calendar year.

Next: ESG Labels For Crypto? Europe Looks To Offset Energy Consumption In Environmental Push

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