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I'm an non-resident alien student (on F-1 Student Visa) in the US. Starting in 2017, I invested in Bitcoin and other cryptocurrencies last year in the US via Coinbase.com. I'm holding on to most of them for appreciation in value but I did exchange some bitcoin for altcoins on Bittrex.

Am I expected to pay tax on these? And how should I go about doing so?

Thanks in adnavce.

  • How many days were you in the US for 2017? – Hart CO Jan 14 '18 at 15:50
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The IRS imposes a flat 30% tax on U.S. source capital gains if present for 183 days or more:

The Taxation of Capital Gains of Nonresident Alien Students, Scholars and Employees of Foreign Governments

A flat tax of 30 percent was imposed on U.S. source capital gains in the hands of nonresident alien individuals physically present in the United States for 183 days or more during the taxable year. This 183-day rule bears no relation to the 183-day rule under the substantial presence test of IRC section 7701(b)(3).

To calculate capital gains, you have to look at each individual sale/trade and determine gain/loss based on values at the time. For example, if you bought 1 bitcoin at $10,000, then sold half a bitcoin for $7,500, you'd have gain of $2,500. If you traded the bitcoin for $7,500 worth of litecoin, you'd still have $2,500 in capital gain. If later in the year you sold your entire litecoin position for $5,000 you'd have no net capital gain/loss, if you sold it for $10,000 you'd have $5,000 in capital gain for the year, etc.

You'd file a non-resident alien version of the standard tax return, form 1040NR along with any required schedules and additional forms.

You could investigate 1031 exchanges for your trade from BTC to altcoins, it's potentially permissible on your 2017 tax return, but definitely not for 2018 forward (now limited to real-estate). It seems unlikely that the IRS would interpret crytpocurrency trades as 'like-item' when they don't consider gold for silver to be like-item trades. That said, I think a lot of people are trying that for tax-year 2017.

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If you've stayed for less than 183 days, then you don't owe any capital gains tax. You have to, however, fill out schedule NEC for any gains/losses from the exchanges not connected to the US based businesses or trades.

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