Cash App Tax Reporting
TokenTax connects to Cash App for easy crypto-currency trade tracking and tax filing.
History of Cash App
Cash App is a United States-based payment processing platform created by Square in 2013. It is very similar to and a direct competitor of Venmo.
Cash App allows you to transfer funds to friends and family using email, their Cash App username, or a Quick Response (QR) code. Cash App also has a VISA debit card with reward points that you can earn to spend at a collection of stores and restaurants.
The platform also provides many traditional banking services. On it, their customers can receive paychecks, tax returns, and other deposits faster than traditional finance platforms. Cash App also supports commission free stock trading and the ability to purchase bitcoin through the app itself.
You can buy Bitcoin with Cash App
In response to an increase in the number of account holders using the app to purchase bitcoin, Cash App began developing more support for crypto. In 2019, Cash App created a bitcoin purchasing feature within their platform for a transaction fee.
Cash App also offers customers the chance to purchase satoshis (a fractional share of a single bitcoin worth a very small portion of a bitcoin each). As of year-end 2019, Bitcoin related revenue accounted for nearly half of Cash App’s revenue.
Security features on Cash App
Cash App has several security features within its app, such as PIN codes, touch identification and facial identification. The platform stores all bitcoin offline to ensure safety, and it has a PCI-DSS level 1 encryption certification. It also has various fraud protection features for the debit cards.
Purchases of BTC with fiat are not taxable, but sales and exchanges are.
Purchasing crypto with fiat currency on any platform is not a taxable event. When you buy your first bitcoin on Cash App and hold it, this is not taxed.
However, if you trade this bitcoin for another crypto or sell it for fiat currency, you will be taxed on your capital gains or losses accrued during the time you held it.
Purchases of goods and services using crypto are taxed similarly, where you recognize a capital gain or loss on the crypto you spend.
Crypto income is taxed in the United States
Receiving payment or wages in cryptocurrency is taxed as income at the time of receipt. Additionally, when you sell crypto that you’ve received as income, you realize any capital gain or loss on said crypto. All of these amounts need to be converted to USD and reported on your tax forms.
Crypto tax software takes your Cash App transactions history and calculates your taxes. For more information on your crypto taxes using Cash App, please read our crypto tax guide and reach out to us on our chat function (lower right corner) for more information.