Massive Problem for U.S. Citizens Using Peer-to-Peer Crypto Currency Transfers
$AST Airswap should be steered clear of by U.S. investors because the IRS requires backup withholding when paying individuals with crypto currencies. I noticed that AST has been one of the biggest gainers in the crypto world in the last couple days. So I decided to look into what this platform does, and when I saw the Airswap method of allowing peer-to-peer transfers on the Etherium network, my tax side just jumped up with a big "Nooooo!".
Per the guidelines the IRS issued about Bitcoin in 2014 crypto currencies are treated as property rather than a currency, and when you transfer property to another individual you are required by the IRS to obtain the tax identification number of that person, and if they are not a U.S. citizen to withhold backup withholding of 24%. If you do not make this backup withholding, you can be on the hook to pay this to the IRS if audited!
Thus I implore anyone out there who is a U.S. citizen and trading in crypto currencies to steer clear of ANY peer-to-peer trading platforms. The risk is monumental when you consider you could owe that for each transaction... Could be far higher amount owed than the amount of crypto currency in your accounts.
Image licensed and purchased from Fotolia.
For more information see:
https://www.irs.gov/pub/irs-drop/n-14-21.pdf
https://www.irs.gov/taxtopics/tc307
Sooner or later every one comes to steemit including the irs many come for the money and stay for the culture 💡🤔
helpful information. thank you @cstranger
Thank you @imrankhan26! :)
I wonder if this affects the steemit platform itself as we are being paid in Steam 4 comments and uploads of content... does this steam that we receive act as property or income?
Steem is self-employment income when you earn it (at the rate compared with U.S. dollars on the date of issuance) then when you trade it for other crypto it is treated as property and any gain/loss to that date is a short- or long-term capital gain.
thank you for this answer. I was about to ask the same thing.
@darksidetaino I went into more detail about this subject in my blog here: https://steemit.com/steemit/@cstranger/earning-on-steemit-you-may-have-us-self-employment-taxes-to-pay