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IRS Says Cryptos Earned From Microtasking Jobs Taxable

IRS Says Cryptos Earned From Microtasking Jobs Taxable

By RTTNews Staff Writer | Published: 8/31/2020 10:33 AM ET

The U.S. Internal Revenue Service (IRS) clarified that cryptocurrency such as Bitcoin earned from microtasks conducted on crowdsourcing platforms is considered taxable income, according to an IRS memo of late June published on August 28.

This was in reply to a query from the IRS's Small Business/Self Employed division seeking advice "regarding the tax consequences for an individual who receives convertible virtual currency for performing microtasks through a crowdsourcing or similar platform."

According to the memo, the specific issue quoted was "Is convertible virtual currency received by an individual for performing a microtask through a crowdsourcing or similar platform taxable income?"

The IRS replies as "Yes" saying that the "received consideration in exchange for performing a service, and the convertible virtual currency received is taxable as ordinary income."

The IRS clarifies that "a variety of digital platforms now enable individuals or entities to "crowdsource" jobs by using the Internet to outsource assignments to an undefined and often large group of other individuals or entities."

According to the IRS, virtual currency that has an equivalent value in real currency, or acts as a substitute for real currency, such as Bitcoin, is referred to as "convertible" virtual currency and is considered a commodity or property for federal income tax purposes.

Accordingly, general tax principles applicable to property transactions apply to transactions involving convertible virtual currency, which are also subject to capital gains laws.

The IRS continues to warn taxpayers, who do not properly report virtual currency transactions, that they will be liable for tax, penalties and interest and in some cases they could be subject to criminal prosecution.

The current guidance for taxpayers is to file each and every transaction executed using a cryptocurrency. The IRS has also increased enforcement activities against taxpayers who "misreport" their cryptocurrency transactions.

For comments and feedback contact: editorial@rttnews.com

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Article written by an RTT News Staff Writer, and posted on the RTT News.com website.

Article reposted on Markethive by Jeffrey Sloe

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