money earned in online game taxable income

The IRS treats virtual currencies such as bitcoin as property, rather than as currency, and says that general tax principles applicable to property transactions apply to transactions using virtual currency. Taxation of virtual currency transactions The same webpage now lists bitcoin as the sole example of a convertible virtual currency. 12 website edit, the Service’s “Virtual Currencies” webpage said that examples of a convertible virtual currency include “Bitcoin, Ether, Roblox, and V-bucks.” Roblox is an online video game platform, and V-bucks is an in-game currency used in the game Fortnite. Transacting in virtual currencies as part of a game that do not leave the game environment (virtual currencies that are not convertible) would not require a taxpayer to indicate this on their tax return.īefore the Feb. We have changed the language in order to lessen any confusion.

The IRS recognizes that the language on our page potentially caused concern for some taxpayers. The clarification came two days after the IRS made an unannounced deletion of language from its website about video game currencies. The Service’s current guidance on virtual currencies applies only to currencies that are convertible, a typical example being bitcoin.

The clarification relates to whether, or when, a currency used in a video game should be considered “convertible,” meaning able to be converted into real currency. Gamers who transact in virtual currencies as part of a video game do not have to report the transactions on a tax return if the currencies do not leave the game environment, the IRS made clear in a statement released on its website Feb.

Money earned in online game taxable income