Are Bitcoin Ordinals taxable?
Yes, like other digital assets such as Bitcoin, the IRS considers Bitcoin Ordinals property. So how are Ordinals taxed? For US taxpayers, capital gains taxes apply if they’re sold, exchanged, or disposed of for a profit. Whether Ordinals are held for a short or long period, any time they’re sold, traded, or transferred, a taxable event occurs that must be reported.
For instance, when you sell or trade Ordinals, they’re reported on IRS Form 8949, listing each transaction’s gains or losses. The totals are then included on Schedule D for capital gains or losses. Staying on top of these reporting requirements is key to accurate tax filing.
What records should I keep for my taxes?
Keeping detailed records of each Ordinals transaction is important to ensure accurate tax reporting. Essential information includes purchase date, acquisition cost, date of sale or transfer, sale price, and any associated fees.
These details are necessary for calculating gains and losses, especially when filling out Form 8949. Keeping organized throughout the year can make tax season easier.
How to do your Ordinals taxes
Step 1: Calculate gains and losses
Gather your transaction history. Calculate your gain or loss for each Ordinals transaction by subtracting the acquisition cost from the sale or exchange price.
Step 2: Complete IRS Form 8949
Use this form to record every Ordinals transaction. After listing each entry, total the gains or losses and transfer them to Schedule D to report your capital gains or losses.
Step 3: Submit your tax forms
Once you’ve completed Form 8949 and Schedule D, include them with your tax return. For those new to crypto taxes, consulting a crypto tax specialist or using a reliable platform like ours can help ensure accuracy.
Prepare your Ordinals taxes with our expert team at TokenTax
Managing taxes on crypto assets, especially with unique assets like Bitcoin Ordinals, can be complicated. Our platform makes it easy to track, calculate, and report gains and losses across sources. Automated tracking will save you time record-keeping and reduce filing mistakes.
Our expert team is also available for personalized support, providing guidance on complex scenarios like those involving Ordinals. With experienced support, you can feel more prepared and confident in your tax filings.