Howdy Folks,

It’s time to talk crypto taxes again.This time, however, we will talk about what you are expected to do if you are being paid in crypto.

Right, let’s see where the taxman’s eagle eyes are focused.

• Getting Paid in Crypto? Yep, You Still Pay Income Tax

• The IRS Sees ALL Income

• HMRC Don't Miss a Trick Either

Getting Paid in Crypto? Yep, You Still Pay Income Tax

Both the US and UK governments seem to be stalling when it comes to accepting crypto isn’t going away. The tax authorities, however, NEVER miss an opportunity to get their sticky hands on your gains!

With more and more people being paid in crypto, coupled with the adoption of centralized finance platforms (CeFi) and the opportunities this brings for people to “earn” crypto, it's important to be aware of the tax implications they bring. Last time we spoke about paying capital gains tax when selling, trading, or spending your crypto assets.I’m afraid the same is true when you receive income as crypto.Both the Internal Revenue Service (IRS) and the HM Revenue and Customs (HMRC) were quick to jump on the bandwagon regarding income tax.

The IRS and HMRC have confirmed they do track crypto transactions on platforms where KYC has been performed. If you’re being paid in crypto into a CeFi platform, they’ll know about it!

Be aware!

Income from Crypto? The IRS Wants to Know

The IRS has published guidance on what could be considered income from crypto; these include:

• Being paid your salary (or part thereof) in crypto.

• Hobby-level crypto mining.

• Receiving crypto from an airdrop or a hard fork.

• Staking rewards.

• Referral bonuses.

When it comes to DeFi, there isn’t much guidance yet, but it would be prudent to prepare. The following could be considered taxable income:

• Earning interest from lending protocols

• Earning crypto from learn/play/shop/watch/browse etc.

• Receiving liquidity or governance tokens.

Yes, HMRC Is on It Too!

Like the US, crypto is subject to income tax in the UK.Crypto transactions classified as income are taxed at your regular income tax band.You may also need to make National Insurance contributions if your salary is being paid in crypto.

Note: If you earn over £100,000, you have a reduced personal allowance; if your earnings exceed £125,000, you get no personal allowance.Transactions that are classed as income include:

• Being paid in crypto. This is also subject to National Insurance.

• Staking rewards

• Crypto mining 

• Receiving crypto from airdrops

HM Revenue and Customs (HMRC) has given guidance on DeFi transactions; this guidance states that DeFi transactions may be subject to income tax.

In short, if you are being paid for providing some service (securing the network, loans, or providing liquidity), HMRC wants income tax for it!

DailyCoin Daily Meme

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