Crypto abroad: what the IRS still wants to know

1What's taxable

• Selling, trading and spending. The IRS treats crypto as property, so selling it for cash, swapping one coin for another or paying with it creates a gain or loss, measured in dollars.
• Earning it. Crypto you receive for work, staking or mining is income, at its value when you receive it.
• Holding period. Gains on crypto held more than a year get long-term capital gains rates.

Every U.S. return asks whether you had digital asset transactions during the year.

2The forms

• FBAR: an account at a foreign exchange that holds only crypto doesn't have to be reported for now. FinCEN has said it plans to change that. If the account also holds cash or other assets, it counts.
• Form 8938: the IRS hasn't said clearly whether crypto on a foreign exchange belongs on it. It could be treated as a foreign financial asset, so we look at it whenever your totals are near the thresholds.
• Gains and losses go on Form 8949 and Schedule D, like shares. U.S. platforms now report sales to the IRS on Form 1099-DA; foreign ones generally don't, so your records do the work.

3Local tax breaks

Some countries tax crypto lightly, or not at all after a holding period. The U.S. doesn't follow those rules: your gain is taxable for the U.S. either way, and with little or no local tax to credit, the U.S. tax is often due in full.

The foreign earned income exclusion covers pay for work, so crypto you're paid in can qualify. Gains when you later sell it don't.

No local tax on crypto usually means U.S. tax on crypto.

4Catching up

Unreported crypto income is handled like other unreported income: under the Streamlined procedures, if you qualify, or one of the other IRS catch-up options if you don't. Download your full transaction history from every exchange while you still have access. It's the hardest part to rebuild later.

Common questions

Keep reading