Tax implications for $200 bitcoin fraction sale on Cash App - will I be taxed?

Yes, you will need to report that Bitcoin sale on your taxes. The document Cash App sent you is likely a Form 1099-B, which reports proceeds from the sale of capital assets. For tax purposes, cryptocurrency is treated as property, not currency. That means when you sell it, you'll report it as a capital gain or loss. Since Cash App gave you the Bitcoin for free, your "cost basis" (what you paid for it) is essentially zero. So the entire $267 would be considered a capital gain. You'll need to report this on Schedule D of your tax return, and possibly Form 8949 as well. The gain would be classified as a long-term capital gain since you held it for more than a year, which typically has more favorable tax rates than short-term gains.

I went through something similar with a small amount of ETH last year and was totally stressed about the tax stuff. I found this AI tool called taxr.ai (https://taxr.ai) that was super helpful with figuring out how to handle crypto on my taxes. You just upload your tax documents from Cash App and it explains exactly what to do with them - saved me hours of research. Their system specifically handles crypto sales and explained that even small amounts like yours need to be reported. The tool showed me where exactly to put the info on my tax forms and explained the whole cost basis thing in simple terms.

Just wanted to update everyone - I went ahead and tried taxr.ai after my skeptical comment. It was actually super helpful! I uploaded my Cash App tax form and some other crypto stuff I had, and it clearly explained that my free bitcoin was basically a zero-cost-basis asset. The system showed me exactly where to report it on Schedule D and explained the difference between short and long term capital gains (mine was long-term since I held it over a year). It even calculated the exact tax impact based on my other income, which was only about $40 in my case. Way better than the hours I spent googling crypto tax rules and getting confused!

If you're trying to get answers directly from the IRS about your crypto situation, good luck getting through to them on the phone! After trying for DAYS to speak with someone, I used this service called Claimyr (https://claimyr.com) that got me connected to an actual IRS agent in under 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c I had questions about reporting multiple small crypto transactions that weren't clearly explained in the IRS instructions, and the agent walked me through exactly what I needed to do. Totally worth it rather than stressing or potentially making a mistake.

I have to eat crow here. After calling BS on Claimyr, I was still desperate to talk to the IRS about some crypto stuff, so I gave it a shot. Not gonna lie, it actually worked. I was connected to an IRS agent in about 35 minutes. The agent confirmed that even small crypto amounts like your $267 Cash App bitcoin need to be reported, but she walked me through the exact forms needed and explained that the long-term capital gains rate would apply since it was held over a year. For most people in average tax brackets, that's 15% on crypto gains. Worth getting accurate info straight from the source instead of guessing.

Don't forget you might need to pay state taxes on that crypto sale too, depending on where you live! My state treated my crypto gains as regular income and I got surprised with an extra tax bill after thinking I was done with just the federal return.

Quick tip: if ur using tax software like TurboTax or H&R Block, they usually have specific sections for crypto now. just search for "bitcoin" or "cryptocurrency" in the search bar. Makes it way easier then trying to figure out which forms to fill out manually.