Gamers can finally relax and take a breath of fresh air in relief, as the Fortnite currency is not taxable. You may have seen conflicting headlines claiming the opposite to be true. This is what happened.

In October of 2019, the IRS had the following words on their website, “Virtual currency that has an equivalent value in real currency, or that acts as a substitute for real currency are referred to as “convertible” virtual currency. Bitcoin, Ether, Roblox, and V-bux are a few examples of a convertible virtual currency. Virtual currencies can be digitally traded between users and can be purchased for or exchanged into U.S dollars, Euros, and other real or virtual currencies.”  In the last several months the IRS has been increasing its awareness of virtual currencies and has recently accentuated that taxpayers may have filing requirements when selling, buying, and trading cryptocurrencies like Bitcoin. However, it’s hard to believe that gaming currencies like Roblox and V-bucks should be included in that categorization. Roblox is an online game where players can purchase upgrades to their avatars through Robux. V-bucks is also a currency from the video game sensation, Fortnite. Similar to Robux, V-bucks can get gamers wraps, outfits, gear, and more. Tax professionals around the country began chatting within mentioning how the language seems off and several tax professionals claiming that the IRS is wrong. A few weeks ago, the IRS quietly and quickly updated the language on the website indicating no mention of virtual gaming currencies. The Internal Revenue Service has since responded that the previous wording may have confused. The IRS gave further information on where it stands with video game currencies in a statement on their website that stated, “The IRS recognizes that the language on our page potentially caused concern for some taxpayers. We have changed the language to lessen any confusion. Transacting in virtual currencies as a part of a game that does not leave the game environment (virtual currencies that are not convertible) would not require a taxpayer to indicate this on their tax return.”  If you’re still a little confused, don’t worry. It means if you play a video game and use the game’s currency but do not convert it to US dollars or another form of currency then there’s no need to include that information on your tax return. Most video game currencies like V-bucks do not allow a player to freely use or exchange them outside of the game. Players may purchase video game currencies with US dollars but because they can’t take that currency and purchase any items outside of the realm of the game, the person is free of being taxed. This means that the video game currency is not convertible. As our values and ideas of currency change and evolve, the IRS will continue to provide guidance and sometimes make mistakes. The current rule as it stands is if a virtual currency including cryptocurrencies and digital currency is convertible it may be treated as a capital asset. Which in turn means that it may be taxable and necessary to report. The key point here is after you start winning money as a gamer you do need to speak with your accountant and keep the tax man happy, or those winnings can become a liability you may never have anticipated.