Fortnite may be the biggest game on the market right now with a dominating Twitch presence, a major PS4-specific tournament with cash prizes, and players spending hundreds in equipment to be at the top of their game. But does that mean the IRS can tax you for its V-Bucks?
Fortnite V-Bucks, taxes, and you
V-Bucks, the digital in-game currency used to purchase cosmetics, emotes, and more, were listed by the IRS as a taxable currency on the IRS website according to a report from Bloomberg. The IRS also listed the game Roblox (not its actual currency, Robux) as taxable on their site. While the site has since been updated to remove them, the original page listed the two as digital currencies alongside Bitcoin and Ether. With more than 250 million players worldwide, the original classification would have been confusing for the massive American player base.
The revised page informs taxpayers that they would have to record whether or not they had received virtual currency in 2019, requiring them to record it in their Form 1040. The IRS defines virtual currency as “transactions [that] are taxable by law just like transactions in any other property. Taxpayers transacting in virtual currency may have to report those transactions on their tax returns.” Additionally, “Virtual currency that has an equivalent value in real currency, or that acts as a substitute for real currency, is referred to as ‘convertible’ virtual currency.”
If the definition had not been updated, it could potentially complicate taxes for any American who has purchased digital currency on any platform. Thankfully, the IRS clarified what is and is not taxable.
In a statement to Bloomberg, an Epic Games spokesperson stated that V-Bucks do not belong on the tax form. “V-Bucks cannot ‘be digitally traded between users,’ nor can they be ‘exchanged into, U.S. dollars, Euros, and other real or virtual currencies.’”
For more Fortnite news, make sure to follow Daily Esports, and for more tax advice, ask a tax professional if you need to record your Minecraft Diamonds and Super Mario Bros. Power Stars on your 1040.