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Colorado set to accept cryptocurrency for taxes

Colorado set to accept cryptocurrency for taxes

On Behalf of | Mar 1, 2022 | Tax Law

A lot of people in Colorado and elsewhere have likely already heard of cryptocurrency. Bitcoin, Ethereum and other blockchain technologies have been used by investors to purchase all types of goods and services online; however, cryptocurrency’s use in the so-called real world has been slow to catch up. Most people still must use traditional forms of currency to pay for many everyday items, but Colorado residents may soon have another avenue to spend their virtual tokens by using them to pay their state taxes.

Colorado the 1st

The Centennial State is the first in the United States to offer people the option of paying their state taxes and fees using cryptocurrency. Blockchain tokens, such as Bitcoin and Ethereum usually have significant exchange rates, with just one Bitcoin equaling thousands of U.S. dollars. As such, those seeking to use cryptocurrency to pay their taxes will have to convert the tokens into equivalent dollar amounts.

The state’s governor, Jared Polis, recently made the announcement, and he went on to mention that using cryptocurrency is not unlike using credit cards to pay taxes with the added benefit that cryptocurrency avoids returned payments and will obviously not incur interest fees. Incidentally, Mr. Polis allowed contributors to donate to his 2014 election campaign using cryptocurrency.

The future of cryptocurrency related to tax payments

Other states have attempted to introduce the use of cryptocurrency for business owners and individuals to pay their taxes, but Colorado is the first state to formally adopt the technology. Those in Colorado interested in using cryptocurrency to pay their taxes will want to fully investigate the matter. Interested parties can gain answers to their questions by consulting with an attorney experienced in the state’s tax laws.