The taxation of Bitcoin Cash (BCH) cryptocurrency in the United States is, like with any other type of asset, highly complex and dependent on several factors. Because the Internal Revenue Service (IRS) classifies digital currencies as property, capital gains tax may apply to BCH that is held for more than one year.

The IRS interprets BCH as a taxable property and not a foreign currency. This means investors need to report profits or losses made on their BCH holdings when filing annual taxes. In general, taxpayers need to declare any profit they earned from buying and selling or trading it as “capital gain” income on their tax returns.

In terms of reporting requirements, if you make over $20,000 in gains from cryptocurrency per year – or if you’ve made at least 200 transactions – then you must file Form 8949 along with Schedule D of your 1040 form when filing your taxes. It’s worth noting that if you don’t meet these thresholds, you can still claim any losses incurred or deductions taken during the calendar year through Schedule A.

For those who accept payments in the form of Bitcoin Cash for goods or services rendered, this constitutes an income sale and should be reported as self-employment income for federal tax purposes. The exact amount of taxable income is determined after taking out any associated expenses directly related to the transaction from the sum received in Bitcoin Cash minus what was paid out—the same way it works with cash sales.

It is also important to note that many states have imposed additional regulations around cryptocurrencies including BCH which may require taxpayers to pay state-level taxes related to their crypto activities. For instance, Washington State has issued guidance requiring businesses accepting digital currencies such as BCH to pay applicable business and occupation (B&O) taxes on all crypto received for goods sold or services provided within its borders.

When dealing with cryptocurrencies—Bitcoin Cash included—taxpayers are advised to take stock of all their transactions throughout the year and document them properly so that they can accurately report them come tax time. Failure to do so could result in penalties from IRS including fines up to $250,000 depending on severity of each case. It is therefore important for anyone involved with Bitcoin Cash transactions in any capacity—be it investing or accepting payments—to understand the various rules surrounding taxation so they can ensure compliance when filing their return each year.