Crypto Gains and U.S. Tax for Nonresidents: When the United States Can Tax Them

A nonresident who sells bitcoin or another digital asset at a gain is often not taxed on it by the United States, even when the trade runs through a U.S. exchange. That general answer depends on three conditions: the person really is a nonresident for income tax, the activity is not a U.S. business, and the person has not spent 183 days or more in the United States in the year of the sale. This dossier explains each condition, the income that does not come from a sale at all, what changes when the holdings sit inside a U.S. company, and what U.S. platforms now report.

How U.S. tax law treats a digital asset

For U.S. tax purposes, a digital asset is property, not currency. The IRS set out that position in Notice 2014-21, and its digital assets page applies it to cryptocurrencies, stablecoins and non fungible tokens alike. Selling one, swapping it for another, or spending it on goods or services is a disposal of property, and the gain or loss is measured in U.S. dollars against what the asset cost.

That classification matters for a nonresident because the rules for taxing nonresidents are built around the type of income. Property gains follow one set of rules, wages follow another, and business profits follow a third. Calling a token money does not move it between those categories.

The starting point: a nonresident's gain is generally foreign income

The United States taxes a nonresident on two kinds of income: income connected with a U.S. trade or business, and certain fixed or periodic income from U.S. sources such as dividends and rents. Our dossier on ECI and FDAP income explains the two categories.

A gain on selling property generally falls into neither. Under the source rules for personal property (Internal Revenue Code section 865), a gain is generally sourced to where the seller resides, and for this purpose a person's residence turns on where their tax home is. A nonresident whose tax home is abroad generally has a foreign source gain, which the United States does not tax. The exchange being a U.S. company, or the servers being in the United States, does not on its own change that.

Everything that follows is about when that general answer stops applying.

First condition: are you actually a nonresident?

A foreign national becomes a U.S. resident for income tax by holding a green card or by meeting the substantial presence test, which weighs days spent in the United States over three years. A U.S. resident is taxed on worldwide income, including every crypto gain wherever it was made, in the same way as a U.S. citizen.

This is the condition that most often changes the answer. Someone who expected to be a nonresident and quietly crossed the day count is taxed on gains made on a foreign exchange from a foreign bank account. The substantial presence test calculator on this site applies the formula to your own travel, and our dossier on the substantial presence test explains how the days are counted. In a year of arrival or departure, a person can be a resident for part of the year only, and gains are then taxed according to when they were made; our dossier on dual status returns covers that year.

Second condition: the 183 day rule for capital gains

There is a separate rule for nonresidents who remain nonresidents while spending a long time in the United States. A nonresident present in the United States for 183 days or more during the tax year is taxed at a flat 30 percent, or a lower treaty rate, on net capital gains from U.S. sources (section 871(a)(2)).

That sounds as if it could never apply, because 183 days would normally make a person a resident. It applies to people whose days do not count toward residency: students, teachers, trainees and certain government employees on qualifying visas. The IRS explains in its guidance on capital gains of nonresident students and scholars that this 183 day rule is separate from the residency test, and that a person who arrives intending to stay longer than a year has generally moved their tax home to the United States on arrival. Their gains then have a U.S. source, and the 30 percent tax can apply even to trades made while they were outside the country.

A student on an F visa trading crypto from a dormitory is the clearest example. They are a nonresident for income tax and may still owe U.S. tax on every net gain for the year. Our dossier on exempt individual days for F, J, M and Q visas explains why their days do not count toward residency.

Third condition: when the activity becomes a U.S. business

Income connected with a U.S. trade or business is taxed at the ordinary graduated rates, whatever its source would otherwise be. The question is when crypto activity reaches that point.

For stocks, securities and certain commodities, the law contains a safe harbour: trading for your own account, including through a U.S. broker, is not treated as a U.S. trade or business (section 864(b)(2)). The IRS has not published guidance confirming whether digital assets fall within that safe harbour. A nonresident who trades only for their own account from abroad is generally in a different position from one who runs an operation here, but the protection that exists for share trading cannot simply be assumed for tokens.

Facts that point toward a U.S. business include an office or fixed place of business in the United States through which the sales are made, which can give the gain a U.S. source under the personal property rules; mining or validating equipment operated in the United States; people in the United States acting for the owner; and selling tokens or services to customers as a business rather than investing. Our dossier on effectively connected income explains how those facts are weighed.

Payment in crypto for work is a separate case. Compensation for services performed in the United States generally has a U.S. source regardless of what currency it is paid in, and the IRS treats digital assets received for services as income at their fair market value in U.S. dollars when received.

Income that is not a sale: staking, mining and airdrops

Rewards are income when received, not only when sold. In Rev. Rul. 2023-14 the IRS ruled that a cash method taxpayer who receives staking rewards includes their fair market value in income in the year they gain control of them. Mining rewards and certain airdrops are treated as income on receipt as well.

For a nonresident, the harder question is where that income comes from, and the guidance does not settle it. A reward could be argued to have its source where the validating work is done, where the network operates or where the recipient lives, and the answer may differ depending on whether the activity rises to a business. Anyone with significant staking or mining income and a U.S. connection should treat the source question as open and document how the activity is actually carried on.

Situation	General U.S. position for a nonresident
Selling tokens held as an investment, tax home abroad, fewer than 183 days here	Generally foreign source and not taxed.
Selling tokens while on a student or trainee visa, 183 days or more here	Can be taxed at 30 percent or a treaty rate on net U.S. source gains.
Selling through an office or business operated in the United States	Can be U.S. business income, taxed at graduated rates.
Paid in tokens for work done while in the United States	U.S. source compensation, taxable at its dollar value when received.
Staking or mining rewards	Income on receipt; the source for a nonresident is not settled.
Having become a U.S. resident under the day count	Taxed on worldwide gains like a U.S. person.

Holding crypto through a U.S. company

Some foreign owners hold digital assets through a U.S. LLC, often one formed online for banking or exchange access. The tax result follows the company's classification, not its name.

A single member LLC owned by a nonresident is disregarded for income tax, so its gains are generally treated as the owner's and the analysis above applies. The company still has its own filing duty: a foreign owned disregarded LLC must file Form 5472 with a pro forma Form 1120 each year, reporting transactions with its owner such as the money put in to buy the assets. Missing it carries a $25,000 penalty, explained in our dossier on the disregarded entity hazard.

A U.S. corporation is different. It is a U.S. taxpayer in its own right and pays U.S. corporate tax on its gains wherever its owners live, so placing a portfolio in a U.S. corporation can turn a gain the United States would not have taxed into one it does. The choice of vehicle should be made before the assets go in, not after.

What U.S. platforms now report

Custodial platforms that act as brokers report digital asset sales on Form 1099-DA. The IRS states that brokers report gross proceeds for transactions on or after 1 January 2025 and cost basis for certain transactions on or after 1 January 2026, and that the final rules do not cover platforms that never take possession of the customer's assets.

A U.S. platform will ask a foreign customer to certify foreign status on Form W-8BEN. That form is how the platform documents that you are not a U.S. person, which changes how your account is treated for U.S. information reporting and backup withholding. It needs to be accurate, and it needs to be replaced when it expires or your circumstances change. Our dossier on the W-8 forms covers their lifecycle.

When a nonresident does file a U.S. return, Form 1040-NR asks whether the filer received or disposed of a digital asset during the year. The answer is yes for a sale, a swap, a reward or a payment in tokens, even where no U.S. tax results.

Questions the guidance leaves open

Three questions remain unresolved, and they deserve caution rather than assumption. Whether the trading safe harbour that protects share trading covers digital assets. Where staking, mining and similar rewards are sourced for a nonresident. And whether digital assets are U.S. assets for estate tax when a nonresident owner dies, a question that matters because the U.S. estate tax threshold for nonresidents is only $60,000; our dossier on U.S. estate tax for nonresidents explains that threshold. Guidance in this area is still developing, so confirm the position at the time you rely on it.

What to establish before you sell or file

1. Count your days in the United States for the current year and the two before it, and confirm whether you are a nonresident at all.
2. If you are in the United States on a student, teacher or trainee visa, check whether you reach 183 days in the year and where your tax home is.
3. Write down where and how the activity is carried on: from abroad for your own account, or through an office, equipment or people in the United States.
4. Separate sale gains from rewards and from payments for work, because each follows its own rules.
5. If a U.S. company holds the assets, confirm its tax classification and its annual filings.
6. Keep dated records of every acquisition, disposal and reward in U.S. dollars, and keep your W-8BEN current on each platform.

The exposure check is a quick way to see where your own facts sit against these conditions, and the IRS exposure analysis page describes how the firm reviews them.

This dossier describes the general mechanics of how U.S. tax rules apply to digital assets held by nonresidents. It is not tax or legal advice, it does not address any particular person or structure, and it makes no representation about the treatment of any specific arrangement. Guidance on digital assets is still developing; confirm the position at the time you rely on it, and take advice on your own facts.