The IRS Includes NFTs In 2022 Tax Language

The U.S. Internal Revenue Service (IRS) has officially stated that all “digital assets” -- including stablecoins, NFTs, and cryptocurrencies -- be taxed under the same rules, offering NFT investors more clarity on the matter. 

This distinction, found in the IRS’ 2022 tax year guide, differs from last year’s “virtual currency” section of the U.S. tax-filing instructions, which provided a narrower definition of a digital token as "a unit of account, a store of value or a medium of exchange."

According to the new guidelines, taxpayers who have "disposed of any digital asset in 2022" through a sale, exchange, gift, or transfer will have to report and pay capital gains tax on the action. 

Also, anyone given NFTs as compensation for services or disposed of a digital asset they held for sale will have to declare them as income. 

The IRS also stated that taxpayers may not be taxed on digital assets if they simply hold one in a wallet or account, transfer one from their wallet or account to another wallet or account they control, or purchase a digital asset using U.S. legal tender, including electronic platforms like PayPal and Venmo. 

While NFTs are widely known as “digital collectibles,” the IRS didn’t classify them as “collectibles,” which would position them beside collectible art, antiques, or gems. These items are taxed at a rate of 28%; stocks, bonds, or cryptocurrencies are taxed at a lower rate -- 0%, 15%, or 10%, depending on a seller’s income. 

The final tax instructions have not yet been released, so the crypto section could still be tweaked before it is official. 

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