Tax Day Is Coming: A Primer on Bitcoin and Taxes

Tax Day Is Coming: A Primer on Bitcoin and Taxes

For workers, anything received as payment for goods or services, including Bitcoin or other digital currencies, is taxable income unless it is specifically exempted. 

If you earn income in Bitcoin in the exchange of services with another person, this will be included in gross income and would be subject to income tax. These bitcoins could furthermore be subject to self-employment tax.

In some places, if you earn money by trading bitcoins or running an exchange, this could be included in gross income and treated as capital gains. This interpretation assumes bitcoins are used as a store of value like gold or another commodity. If treated as currency or debt, the gains could be taxed based on market value at the end of each tax year. 

Some common sense assumptions about how Bitcoin will be regulated can be made by the nature of Bitcoin itself ‒ for instance, by tying the value of bitcoins to the local fiat currency. So when one receives a bitcoin, a note should be made of that coin’s USD value (or whatever currency) as a cost basis for tax reporting.  

The existing framework applies to miners. Mined coins are recorded as income from mining and are taxable, and

Read more ... source: TheBitcoinNews

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