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if I buy and sell rubles, pounds, yen, euros, etc, do I have to pay tax on those? legit question. I've traveled a bit, but never 'exchanged' enough currency w

if I buy and sell rubles, pounds, yen, euros, etc, do I have to pay tax on those? legit question. I've traveled a bit, but never 'exchanged' enough currency where I thought it was an issue.

corysama 5y ago
The IRS wants their cut of your profits. So, if you buy $10 US worth of euros, spend half of them, the dollar tanks, and you exchange the remaining half back for $6 US, then you profited by $1 US and the IRS wants part of that one dollar.
- Raidion 5y ago
  What happens if you buy Bitcoin, it goes up, and you buy something directly with Bitcoin? Do you get taxed on those "gains?". Or only if the proceeds end up back in USD?
  - deleted 5y ago
    [deleted]
  - smeej 5y ago
    Yes, the IRS expects you to pay taxes on the delta between the value of the coin when you bought it and the value of the good you exchanged it for.
klodolph 5y ago
Yes, you are taxed on these the same way stocks and crypto are taxed. It's called "forex" or the "foreign exchange market" and the relevant search terms to answer your question are "forex capital gains". https://www.investopedia.com/articles/forex/09/forex-taxation-basics.asp https://www.investopedia.com/articles/forex/09/forex-taxatio... There are exceptions for small amounts of money used for personal reasons, I think it's $200. So if you travel to France, buy Euros, and then return to the US, and buy dollars with your leftover Euros, it won't be enough dollars to get taxed.
- mgkimsal 5y ago
  yeah, that's the scenario I was thinking of - even if it was more... like... a few thousand. but today there's little reason to have too much cash for the average traveler, I'd think. I have a few Romanian lei in my wallet, but not enough to be taxable :)
Raidion 5y ago
Yes. I mean, if you're a professional currency trader, that's how they make their money. IRS really just cares about "income" though, doesn't really matter where it comes from: job, yard sale, crypto, selling drugs, whatever. I'm not an expert at this, so I'm fairly curious to some similar edge cases like, what if you open an EU bank account, convert 100k USD to Euros. The Euro/USD gains a few basis points and then you buy a car. Are you taxed on the delta between when you bought the Euros and when you "sold" them? Is that any different than the (former) situation where you could buy 100k worth of bitcoin, then use the bitcoin to buy Tesla? Both are assets that appreciated vs USD. Stocks seem pretty simple, because you always have to convert back to USD, but what if you don't have to convert?
mgkimsal 5y ago
EDIT reply:... Duh - forex - yeah - had folks in our Coworking space that were doing forex a few years back, and... I never connected that with what I was thinking. I was more thinking just... if I travel - if I buy some euros, then sell then when I get back and there's a profit (or loss) is that a taxable event? But... professional trading, yeah, seems obvious.

if I buy and sell rubles, pounds, yen, euros, etc, do I have to pay tax on those? legit question. I've traveled a bit, but never 'exchanged' enough currency where I thought it was an issue.

corysama 5y ago

The IRS wants their cut of your profits. So, if you buy $10 US worth of euros, spend half of them, the dollar tanks, and you exchange the remaining half back for $6 US, then you profited by $1 US and the IRS wants part of that one dollar.

Raidion 5y ago
What happens if you buy Bitcoin, it goes up, and you buy something directly with Bitcoin? Do you get taxed on those "gains?". Or only if the proceeds end up back in USD?
- deleted 5y ago
  [deleted]
- smeej 5y ago
  Yes, the IRS expects you to pay taxes on the delta between the value of the coin when you bought it and the value of the good you exchanged it for.

klodolph 5y ago

Yes, you are taxed on these the same way stocks and crypto are taxed. It's called "forex" or the "foreign exchange market" and the relevant search terms to answer your question are "forex capital gains". https://www.investopedia.com/articles/forex/09/forex-taxation-basics.asp https://www.investopedia.com/articles/forex/09/forex-taxatio... There are exceptions for small amounts of money used for personal reasons, I think it's $200. So if you travel to France, buy Euros, and then return to the US, and buy dollars with your leftover Euros, it won't be enough dollars to get taxed.

mgkimsal 5y ago
yeah, that's the scenario I was thinking of - even if it was more... like... a few thousand. but today there's little reason to have too much cash for the average traveler, I'd think. I have a few Romanian lei in my wallet, but not enough to be taxable :)

Raidion 5y ago

Yes. I mean, if you're a professional currency trader, that's how they make their money. IRS really just cares about "income" though, doesn't really matter where it comes from: job, yard sale, crypto, selling drugs, whatever. I'm not an expert at this, so I'm fairly curious to some similar edge cases like, what if you open an EU bank account, convert 100k USD to Euros. The Euro/USD gains a few basis points and then you buy a car. Are you taxed on the delta between when you bought the Euros and when you "sold" them? Is that any different than the (former) situation where you could buy 100k worth of bitcoin, then use the bitcoin to buy Tesla? Both are assets that appreciated vs USD. Stocks seem pretty simple, because you always have to convert back to USD, but what if you don't have to convert?

mgkimsal 5y ago

EDIT reply:... Duh - forex - yeah - had folks in our Coworking space that were doing forex a few years back, and... I never connected that with what I was thinking. I was more thinking just... if I travel - if I buy some euros, then sell then when I get back and there's a profit (or loss) is that a taxable event? But... professional trading, yeah, seems obvious.