Bitrefill Tax Guide

Bitrefill is a convenient service to purchase gift cards with crypto, but do you have to pay any taxes using it? 

Are you earning crypto rewards from your purchases with Bitrefill? In the US, purchasing anything with crypto leads to a taxable event. But what about transactions on Bitrefill? 

Let’s cover if gift card purchases are taxable, taxes around crypto rewards and gifts, how to report your Bitrefill taxes, and more!

Key takeaways

1. Purchasing gift cards with a cryptocurrency on Bitrefill or a similar service is a taxable event in the US
2. Receiving cash-back rewards in the form of cryptocurrency (or fiat) is usually not a taxable event in the US
3. Those purchases with crypto need to be filed in the correct tax form
4. CoinTracking is the best Bitrefill tax calculator to help you manage all of your tax obligations

Is purchasing gift cards with crypto on Bitrefill a taxable event?

If you purchase a gift card with cryptocurrency, this event would be subject to the capital gains tax. It is treated as if you first sell your crypto for the USD amount of gift card you want to buy, then immediately use the USD amount (sales proceeds) to purchase the gift card. The deem sale of your crypto for USD is a taxable event and gain/loss will need to be calculated and reported on your tax return.

Bitrefill gift cards are denominated in fiat, therefore, there are no tax consequences when you use the gift cards to make purchases. However, if you use a crypto gift card to make purchases, it is a taxable event. This is the same process as if you were purchasing any product or service with a cryptocurrency.

You can even pay your taxes with crypto using Bitrefill. Learn more here.

Buying gift card with crypto: Example

You bought 1 Bitcoin at $20K in November 2020. You decided to buy a gift card with 0.2 BTC in November 2022. At that time, 1 Bitcoin is $30K. When you convert the 0.2 BTC to the gift card in November 2022, it is worth $6K, but in November 2020, the same 0.2 BTC was worth $4K.

If you buy the gift card for that amount of Bitcoin, you’d have to pay long-term capital gains tax for the realized gain of $2K ($6K-$4K).

Is earning crypto rewards on Bitrefill taxable?

Bitrefill offers between 1% and 10% cashback crypto rewards. In the U.S. credit/debit/gift card cashback reward related to using the card for purchases is not a taxable event.  

You don’t need to report the cashback reward you received as income. However, you will need to calculate and keep track of the FMV (measured in USD) at the time of each of your receipt, as that will become your cost basis in the crypto you received as cashback reward. 

CoinTracking can help you track your cashbacks from Bitrefill with our new CSV importer and make it easy for you to generate the necessary tax reports. You can use “Non-taxable Income” as the transaction type in CoinTracking to record your cashback receipts. 

Do you have to pay taxes on crypto gifts?

If you receive crypto as a gift, you wouldn’t have to report that gift as income or pay taxes in the US.

If you’re the person offering the gift, you’d have a tax-free threshold of $17,000 (2023). If you surpass the annual exclusion amount, you’d need to file a gift tax return.

If you are the recipient of a crypto gift, you usually don’t need to report it regardless of the gift value unless you received the gift from a foreign donor. However, you will need to know the donor’s cost basis and date of acquisition for the gift, as most likely you will get the “inherited” basis and holding period. Find out more about taxes on crypto gifts.

Is sending crypto to another wallet taxable?

No, you can transfer crypto holdings from one personal wallet to another that is also owned by you without incurring any taxable event in the US.

Please be aware that you cannot deduct the transaction fees of sending crypto from one wallet to another. However, if you only transfer your crypto holdings, you wouldn’t have a taxable event in the US.

Is swapping crypto taxable?

Yes, swapping a cryptocurrency for another cryptocurrency is a taxable event in the US and it is subject to capital gains taxes.

In the US, crypto-to-FIAT and crypto-to-crypto exchanges/trades are taxable events and they are subject to capital gains taxes. This includes any transactions between NFTs, cryptocurrencies, and FIAT (e.g., USD). The only exception is purchasing crypto/NFT with FIAT.

Discover more in our full guide for 2023 US crypto taxes.

How do you get tax documents for Bitrefill?

You can easily access your transaction information from your Bitrefill account by following these steps:

1. Log onto your Bitrefill account 
2. Press on the gold ‘coin button’ next to the cart on the top right-hand side of the page
3. Press on ‘account balances’ to reach your account page
4. Press on the ‘Export Transactions Report’ button above your transaction history on the right-hand side of the page
5. Press the red ‘Get the Report’ button and receive the CSV file as an email to your email address.

You can then import that file into a crypto tax calculator like CoinTracking to determine all of your gains/losses and generate the tax reports you need to be compliant.

How to report your Bitrefill taxes?

Purchasing gift cards with crypto on Bitrefill will lead you to have taxable events in the US, where you need to determine the gain/loss on each of those purchases.

You have to report each gain/loss on the appropriate tax forms, including Form 8949 and Schedule D of Form 1040. Discover what tax forms apply to crypto.

If you have earned cash-back rewards as crypto, you’d need to determine the Fair Market Value (in USD) when you received those rewards, although you don’t need to report them in your US Income Tax Return, as you need that to establish your cost basis.

Does Bitrefill report to IRS?

Crypto services operating in the US may be contacted by tax authorities like the IRS to provide customer information in cases where authorities believe there’s a misreport or lack of reporting of crypto taxes.

You may receive a letter from the IRS with the due tax burden if you’ve failed to report them in the past or misreported them.

On the other hand, crypto brokers may also have legal directions to share information related to your trading, giving the IRS a complete view of people who are not reporting their crypto taxes. However, there a few legal ways to reduce crypto taxes.

The best Bitrefill tax calculator: CoinTracking

The best crypto tax tool to track Bitrefill transactions is CoinTracking.

With the right crypto tax tool, you can import your crypto trades, track gains/losses, and generate tax reports. CoinTracking can do even more, including:

• Tracking transactions from 110+ available exchanges, including DeFi and NFTs
• Analyze your portfolio with 20+ advanced reporting features, including which coins are eligible for a tax-free rate
• Tax reports based on 10+ accounting methods (e.g., FIFO, LIFO, HMRC, ACB)

Crypto taxes done for you with Full-Service

CoinTracking also offers a Full Service for US crypto investors. A crypto reconciliation tax expert from Polygon Advisory Group, a leading US crypto tax firm, will review your CoinTracking account, help fix any errors, and ensure you submit your crypto tax reports error-free.

Disclaimer: All the information provided above is for informational purposes only and should not be considered as professional investment, legal, or tax advice. You should conduct your own research or consult with a professional financial advisor when investing.