How exactly do taxes from Steemit income work?
Right now, I'm using a website called Cointracking to track all of my crypto assets across various exchanges and wallets. The website has a cool API import feature, which lets me automatically record everything I did on any of the exchanges I used. This way, the website tracks 100s of my transactions, deposits and withdrawals, then calculates my gains/losses for taxes.
However, Cointracking doesn't have integration with Steemit.
Even if it did, tracking all the transactions would be a problem. A simpler way to watch your income from Steemit, is to count withdrawals from your steemit account. However, is this allowed?
Why I think this might be allowed
- Think of your Steemit account as your workplace.
- The only difference, is that steemit tells you how exactly you are generating value and what portion of it goes to you.
- A typical job on the other hand, hides the value you generate. At best, it sets minimums. For example a marketing team unable to generate expected sales is going to be deemed not profitable and be let go. But exceeding those expectations would give them an arbitrarily set bonus at the end of the year.
Why I think this isn't allowed
- It doesn't matter if you withdraw your cash or not. Since the money stored in your brokerage or coinbase account is yours', any sells deposited using that account is going to be taxed.
- You have control of your Steem Dollars (SBD) and Steem. Your Steem Power (SP) can be powered down any time you want.
As you can see, there are equally valid cases for both sides of the argument as to whether or not your Steem income stored in your steem account should be counted as taxable income.
If Steemit income is indeed taxable, should a programmer generating a value of $1M a year for the company be taxed for an income of $1M? What if the company he works for, returns the value in the form of free coffee, bean bags, free lunches and vacation time? Are those taxable? What are your thoughts? Please comment away.
For tax purposes, fluctuations in the value of a cryptocoin are irrelevant until cashed out for fiat currency, or so I — no expert — believe.
I think only withdrawals should be taxed, if we are going to maintain the value of all cryptocurrencies keeping money in cryptocurrency should not be taxable.
If you are paid for work in coffee, then, you need to declare the value of the coffee as income.
Nobody does that, of course, and the IRS doesn't always care, but that's the rules.
Think about if you were compensated with computer equipment. If you got $3,000 worth of gear, then, you are supposed to claim $3,000 of income. You are taxed at the market value of the items. There's a logic there.
According to H&R Block, here's how goods are taxed:
"Barter — The FMV of property or services you receive or provide in exchange for work done is taxable income. Report this income on Schedule C. You can use another form or schedule if you barter property items instead of services.
If you’re a member of a barter exchange, you should receive a Form 1099-B. This shows the FMV of all property and services you traded during the year."
Now, all that said, cryptocurrency is treated like an investment, and it's taxed as capital gains.
You take the money you took out, and subtract the money you put in. That is your capital gain. That is taxed at a different rate than income.
wow. great post @divyanthj
I've never heard about Cointracking before.
thx for sharing. cheers, Piotr
ps. that's a bit old post so cannot upvote :(