The IRS wants to tax every penny of your crypto, US government memorandum says
A recent memorandum from the U.S.’ tax authority, the Internal Revenue Service, or IRS, attempted to clarify taxation rules around receiving crypto assets as payment.
“Is convertible virtual currency received by an individual for performing a microtask through a crowdsourcing or similar platform taxable income?” said a document released on Aug. 28, adding:
“Yes, a taxpayer who receives convertible virtual currency in exchange for performing a microtask through a crowdsourcing platform has received consideration in exchange for performing a service, and the convertible virtual currency received is taxable as ordinary income.”
Crowdsourcing — calling on a number of participants to work on a project or task — is a common business model in the Blockchain space. The memorandum described microtasks as smaller bits of work dished out to multiple workers as part of a larger task.
Regardless of the makeup, the memorandum pushes one main point — that payment in cryptocurrency, however large or small, is taxable income. “The convertible virtual currency received must be reported on the taxpayer’s income tax return as ordinary income and may be subject to self-employment tax,” the document concluded.
The memorandum surfaced as an internal IRS document on June 29, but was not made public until months later on Aug. 28.
The IRS has increasingly tightened its overwatch on crypto in recent years. One of the latest developments sees 2020 U.S. tax forms asking citizens to disclose if they have interacted with digital assets at all over the course of the most recent year.
This post first appeared here: https://cointelegraph.com/news/the-irs-wants-to-tax-every-penny-of-your-crypto-us-government-memorandum-says