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RE: I'm trying to wrap my head around paying taxes for Steem profits. #Coding #Python
The question is how to count taxes not just for Steemit , but also other cryptocurrencies. It is not really regulated at the present moment, but what i know is that some people are paying income tax when they withdraw to the bank account. In fact it is very good question how we can deduct it , i am sure there are law firms that are focusing on this matter.
If I sell crypto here in Finland, it is taxed as capital, but if I get paid in whatever be it crypto, eggs or computer equipment, it will be taxed as income.
The thing I don't quite understand is that if I get taxed income tax for receiving a cryptocurrency, then sell that said cryptocurrency, do I get taxed again, this time as tax on capital? I have not seen anyone explain how it works, or why it would work like that.
The following applies to Finland:
If you buy cryptocurrency and later sell it for fiat or exchange it for goods or services at a higher exchange rate, your gains will be taxed as capital gains. Losses in such exchanges cannot be deduced (I know, it sucks but that's the way it is.) It is very simple in that sense. Exchanging one cryptocurrency for another is not a tax event.
There are social media or games that use internal currencies. Activity rewards on them are taxed as income. Each and every instance of gaining access to such gains is a tax event. To calculate your taxes correctly, you need to know the exchange rate at each moment and tally everything up for the tax year in question and report that figure. Also, income from mining cryptocurrency is taxed as income according to the same principles.
Because calculating everything precisely in case of author and curation rewards on Steem is such as bitch and no tools exist to do it, I will resort to the next best thing, which is this using this calculator of money traffic on Steem that did a month-by-month conversion of everything in dollars. Just can't find it anywhere. Can anyone help? Or, better, suggest a better tool? In any case, in my case, we're talking about only some hundreds of euros.
Not sure what tool you mean, but here's a collection of some of the tools available for Steem, can you find it there?
I think it really depends on your local laws. The best thing to do , is not doing research yourself, but go to law firm. For example in UK, if i am not mistaken they pay only for income , although i might be mistaken. I have some law background, but i have no freaking idea how it works with cryptos. So yea as I said, bet solution - pay to lawyer and ask as many questions as possible ))
If you get paid in cryptocurrency for work, it will be taxed as income. It makes no difference whether you're paid in fiat or crypto. If you sell your possessions and get paid in crypto, you maybe taxed for capital gains. Now, if you sell, say, a used piece of furniture, it is assumed that you bought it for a higher price and sold at a loss. Hence, no tax liability. On the other hand, if you buy a flat and sell it later for a higher price, you will be liable to pay tax on your capital gains.
You do not get taxed for merely receiving cryptocurrency. If someone transfers you STEEM as a gift and the market value of that gift is less than the annual limit for tax free gifts (4000 euros per year or something), you will not have to pay tax for merely receiving it. If the value is above the threshold, you will have to pay a gift tax on the exceeding amount. If you get that sum, in STEEM, in exchange for authoring or curating content, you'll have to pay income tax. Now, if you exchange any of the STEEM for fiat (or goods or services) at a higher value, you will have to pay tax on your capital gain.