— February 5, 2018
People have been hopping on the cryptocurrency bandwagon left and right lately, and many of them are doing so because they don’t fully understand what cryptocurrency is. They tend to think it’s some magical currency that you can do whatever you want with and that you don’t have to pay taxes on. In reality, it is much more strictly regulated than that, which is getting a lot of people into a bind.
In the United States cryptocurrency is treated like property as far as the Internal Revenue Service is concerned. When someone pays you in cryptocurrency that is still taxable income just as though you were bartering property. When your property goes up in value and you sell it you are responsible for paying capital gains taxes on it, as well.
Other countries are starting to regulate cryptocurrency more heavily, as well. South Korea recently enacted a tax on cryptocurrency transaction, presumably to fund its ability to monitor what is being done with it. Other governments, like Egypt, have banned cryptocurrency outright because of fears that it will destabilize the economy.
If you want to be able to use cryptocurrency in your business, it’s solely up to you to ensure you are doing so in a legal and ethical manner. You can’t use it to pay for illegal things because that is still a crime. You won’t be anonymous even if you try to be because there is no such thing as anonymity anymore. If you want to be able to use cryptocurrency, pay your taxes and engage in legal activities with it.
Japan has already recognized cryptocurrency as legitimate currency, and many other governments are likely to follow suit. States like Colorado and Vermont are taking steps to recognize cryptocurrency as legitimate. Learn more about cryptocurrency myths from this infographic. Are you ready to join the cryptocurrency revolution?
Infographic source: Coin Central