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Crypto Wallet to Wallet Transfers: Are They Taxed?

Investing in cryptocurrency has been a popular trend in recent years, as cryptocurrencies provide increased liquidity and decreased fees compared to traditional currencies. While the gains associated with trading crypto can accumulate quickly, one important question must be answered before you start making profitable trades: is sending crypto to another wallet taxable? To help answer this common question, let’s look at whether transferring funds from one crypto wallet to another triggers any tax implications.

Taxation in Cryptocurrency in General:

The rules for taxing cryptocurrencies can differ based on where you are located. Every jurisdiction has its own regulations. Generally, cryptocurrencies are seen as property from a tax perspective. This implies that any action associated with buying, selling, or exchanging cryptocurrencies could create a tax obligation.
In the US, the IRS considers cryptocurrencies as property for tax purposes. Hence, if you sell or exchange your cryptocurrencies for a profit, you must report the gains on your tax return and pay capital gains tax accordingly.

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