Cryptos Earned from Microtasks are Taxable: IRS

Source: Finance Magnates 2020-09-01

The United States Internal Revenue Services (IRS) has confirmed that cryptocurrencies earned from microtasks through various crowdsourcing platforms are considered as taxable income.

The agency clarified its stance in a memo published on August 28, but was drafted in late June, in response to an inquiry by the US agency’s Small Business/Self Employed Division.

In the memo, the questionnaire asked that if “convertible virtual currency” received by anyone in exchange for microtasks on various platforms are taxable, and in response, the IRS wrote “yes.”

“…a taxpayer who receives convertible virtual currency in exchange for performing a microtask through a crowdsourcing platform has received consideration in exchange for performing a service, and the convertible virtual currency received is taxable as ordinary income,” Ronald Goldstein, author of the IRS memo stated.

He also specified the nature of microtasks that many are indulged in earning a small amount of crypto.

“…a firm may offer to pay workers in units of Bitcoin or other convertible virtual currency if the worker processes data or reviews images,” the memo detailed.

Many also earn digital currencies by “a comment, downloading games and reaching certain milestones, completing online quizzes and surveys, or registering accounts with various online services.”

Rush for crypto tax regulations

Without any proper crypto taxation framework in the United States, taxpayers often refrain from declaring small incomes obtained in digital currencies. Though the recent step does not show the agency’s move towards streamlining the taxation process, it surely shows the seriousness of the IRS in imposing taxes on crypto gains.

Last week, Finance Magnates reported on the fresh notices sent by the tax department to the potential cryptocurrency investors seeking a declaration of their investments.

Meanwhile, to bring a proper digital currency taxation framework, the department is also working with the industry players.

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Cryptos Earned from Microtasks are Taxable: IRS

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