RE: I've "made" over $20,000 blogging on Steemit. Do I have to pay income tax on all of it?!
Oh wait, that's for steem itself? I was thinking that steem wasn't even recognised by law yet, I was thinking of in terms of receiving steem and then selling to Bitcoin.
I'll need to read up on that if the rules for steem itself are different, thanks for letting me know, I'm in the UK, so it probably isn't an issue yet and the Bitcoin rules apply but I wasn't aware of this.
When you purchase Bitcoin with USD, this is a capital transaction, which does not create a taxable event. It’s similar to purchasing a security or a piece of real estate. Once the Bitcoin is sold for fiat (USD, EUR, etc.), a taxable event occurs, subject to rules regarding capital gains and losses (long term vs short term).
This bit is exactly what I was referring to in regards to Bitcoin, I would have thought that Steem wouldn't even be recognised by governments yet by a currency because of the low trade volume because that's how it worked with Bitcoin. The banks and the government only started caring when the money started flowing.
I think the IRS might have changed the rules slightly since last I checked, in the UK you don't owe any taxes until you turn it into GBP.
Since Steemit doesn't issue 1099's to individuals, it's highly unlikely the IRS will be looking to collect taxes on non-USD payments to you. The likelier scenario is that you sell your Steemit for USD at some point down the line and must take either a short term or long term election on the gain in value. The IRS cares about the resulting FIAT for the most part. This is true with stocks as well. You can invest in the stock market for 100 years without selling your stock and never have a taxable event (excepting dividends paid in cash). It's only when you go to sell the stock that your tax burdens kick in.