The first IRS tax guidance for cryptocurrencies was introduced March 2014, and few CPAs have done comprehensive analyses of the record-keeping and enforcement challenges that will arise from the IRS designation of Bitcoin as property rather than currency.
The sale or exchange of a convertible virtual currency has tax implications, the nature of which depends on the investment and business activity.
If you are an employer paying with a cryptocurrency, you must report employee earnings to the IRS on W-2 forms.
You must convert the cryptocurrency value to U.S. dollars as of the date each payment is made and keep careful records. Wages paid in virtual currency are subject to withholding to the same extent as dollar wages.
Employees must report their total W-2 wages in dollars, even if earned as cryptocurrency. Self-employed individuals with cryptocurrency gains or losses from sales transactions also must convert the virtual currency to dollars as of the day earned, and report the figures on their tax returns.
The best entity structure for individuals in this regard has been covered in previous articles regarding entity structure choices: https://www.camusocpa.com/tax/is-s-corporation-structure-right-for-your-business/#/
Camuso CPA PLLC offers comprehensive services to develop and tailor a first-rate tax plan for your business needs. Reach out to our team regarding any questions about Cryptocurrencies or establishing a comprehensive tax plan. Our firm is a pioneer in cryptocurrency taxes, and can offer you knowledgeable tax guidance for cryptocurrency in Charlotte.
Contact Us Today: https://www.camusocpa.com/contact/#/