Hello, never posted here, but I figure this is a good place to ask this question. I know people will judge me for this, however I don't mind really, just want to make sure I'm following the rules properly.
I signed up for a credit card in March through Gemini ( crypto exchange ) , and I receive Bitcoin as a reward for using their credit card. I have accumulated only around $50 worth of btc with this card (0.0007 btc for those interested), and I'm wondering if in 2025 while filing taxes, is this considered income I need to report? I know it's not a lot, but by April 2025, I suspect it will be around $200ish (Again, not a lot) but I'm not sure how the tax laws in the US apply in this situation.
With regular cash back rewards, I know that is considered income if you redeem them, and therfor taxable. With btc rewards, I'm not sure if it's considered income to "buy" btc with the rewards, and is therfore taxable, or if it's a capital gains tax only if I sell. I, personally am not buying the btc, but will the government see this as a taxable event?
I will not convert these rewards back to USD in the near future, and in April of 2025, that money will still be BTC. I suspect this money is considered taxable only if I sell, but I'm not sure... Again, I will not sell these rewards for USD at all in the near future, and if I do, I'll report it as capital gains (or loss, lets be real 🤣) , but I need to know if the accumulated rewards will still be taxed despite me not selling it for USD.
Or Maybe the profit from the rewards is taxable, I have $50 worth of btc, however, I've only accumulated $48, and the $2 is from gains. Maybe only $2 is taxed, and the rest isn't?? I have no idea lol
If it is considered taxable, I'll use the cost basis for each reward to figure out the tax implications, which will be a pain since each reward is anywhere from $0.01 to $1.00. I use it to pay for things I'd buy anyway, and basically pay it off immediately.
Not sure if this is relevant, but the credit card balance is paid off in full every month, always has zero balance by payment date.
If anyone has any insight, I'd greatly appreciate it, thanks! Also please forgive my ignorance, I'm just trying to learn haha
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