Aug 31, 2020 at 07:31 UTCUpdated Aug 31, 2020 at 08:12 UTC
Jar of pennies (John Brueske/Shutterstock)
Cryptocurrency earned from carrying out small tasks valued as low as $1 is taxable, the U.S. Internal Revenue Service (IRS) said in a memo Friday.
- In a memorandum first reported by The Block, the IRS’s Office of Chief Counsel published a response to a June 29 request for clarification from the tax agent’s own Small Business/Self Employed Division.
- The question centered around whether crypto earned by an individual for performing a microtask through a crowdsourcing or similar platform was a taxable income.
- “Yes,” IRS senior technician reviewer and memo author Ronald Goldstein said, “the convertible virtual currency received is taxable as ordinary income.”
- Goldstein added that cryptocurrency “acts as a substitute for real currency” and is therefore considered property for federal income tax purposes pertaining to section 61(a) of the IRS tax code.
- An example of microtasking included a company offering to pay workers in bitcoin for processing data or reviewing images.
- The value of crypto paid in exchange for microtasks are often small amounts that could be less than $1.
- Other examples included downloading an app and leaving a positive review; downloading games and reaching particular milestones; completing online quizzes; or registering accounts with various online services.
- According to the memo, these types of microtasks “may provide individuals with rewards” in the form of cryptocurrency and are thereby subject to the same regulations as regular money.
- The guidance comes at a time when the tax agency has been in crackdown mode to end suspected crypto tax avoidance, seemingly contradicting the advice of its own watchdog.
See also: Bitwage Rolls Out Tax Calculator Tool as IRS Ramps Up Crypto Pressure
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