The IRS has taken the position that cryptocurrencies shall be considered as property for the purpose of Federal taxes. (Link to IRS statement) (Link to more detailed IRS Q&A) This results in somewhat of an onerous tax reporting requirement for anyone using cryptocurrencies regularly for purchases, or for anyone regularly trading cryptocurrencies in any way. Each transaction becomes a potentially taxable event.
For example, say you bought a bitcoin at $1,000. At some later date you buy a cup of coffee for 0.001 bitcoin, and the cup of coffee was valued at $4. Your 0.001 BTC cost you only $1, but then you "sold" it for coffee worth $4, meaning you realized a $3 profit, and you now owe taxes on those $3.
For this reason we encourage anyone who frequently uses cryptocurrency to consult with a tax professional in order to accurately file.