So as a pipe cleaning exercise, I’m thinking of going through the cash-out process for my current payout.
Though since it’s pipe cleaning. I’m wondering what the right way would be to approach this from a tax perspective.
I had a similar talk about crypto currencies with my accountant. What type of taxes applied and whether it would somehow involve my freelance status. Their argument was, though you’re a developer, you’re not in the crypto business so you can treat it as you would any private asset. Here though, it’s not an asset but more like a service. And I’m definitely expected to know what I’m doing as I’m in that business as a freelancer.
For small amounts I don’t think it matters, everyone does a bit of “private work” off the books for friends and family, doesn’t matter if it’s related to their profession. But if it reaches the scale where that generates payouts approaching paycheck levels, I think it would be an issue.
Would the open collective foundation already distinguish it for us as not being a professional service, but compensation for doing something for the foundation?
Same there though. At what point would that trigger similar problems though where the tax service would argue: look these people are basically employees so you’re avoiding taxes by not treating them as such.
I’d wager the big names on open collective, like webpack, have thought this through already. And open collective themselves may know. Would be good to figure that out as well.
Would be a nice to have problem in the mid term
Quoting some information from the open collective link:
If you are filling invoices for more than $600 USD per year to a Collective with a Fiscal Host in the US (receipt reimbursements don’t count toward the $600 limit, only invoices), you will need to send them a from W9 (for US persons) or W8-BEN/E (for non-US persons). The fiscal host admin should contact you if you are required to submit a form.
For tax purposes, you will likely be treated as an independent contractor and you will be issued a 1099 if your earnings exceed $600. Here’s a good explanation of how W-9s work for independent contractors, and there’s more info on what a 1099 is here.
If you don’t meet the $600 threshold, simply report your earnings as miscellaneous self-employment income when you file your taxes.
I would definitely expect to pay income taxes on any earnings from the CredSperiment.
I think crypto IRAs are now a thing too and they have awesome benefits
if mana/cred depreciates in value or disappears entirely that could have much different tax implications than if there’s an inflationary system (depends on your jurisdiction! do your own research! - search “demurrage” in this post)
TBH I have no idea though so consult with tax professional in your local jurisdiction (duh)
I think Uber is still getting away with this actually, so… north of 40B?
Added what I could find, but tbh I haven’t looked into it that much. If anyone else does look into it, however, would be very curious to learn about what kinds of token mechanisms would be tax efficient/friendly (and less confusing/stressful for users)
Well frankly, I’m not trying to optimize for paying the least amount of taxes. On a theoretical level, I’m a proponent of taxation, setting aside the fairness debate for a moment. So I’m concerned with doing it properly, over getting away with the least amount.
The discussion in CredSperiment: Week 1 Payouts however, about not tying mana to fixed $ rates may effectively turn mana into a token though. And like crypto currencies may need to be considered as assets as well until cashed out.
I know this post is about a year old, but as a newbie, I am very interested in figuring out the US tax implications of participating in SC. From what I understand, the IRS is serious about cryptocurrency taxation this year.
My first question is: What did people do for their taxes last year (I’m interested in US but sharing other country’s experiences could benefit the community)? Did anyone have access to a professional accountant? Does anyone have access to a professional accountant this year? It would be lovely to share any knowledge given by the accountants if so. I acknowledge that nothing in this discussion will be considered as tax advice and all should be considered independently with no responsibilities given to the advisor.
I was reading a couple of articles. Here is an article that specifically calls out cryptocurrency received as income for work in the US. From what I understand, essentially if you are opted in to receiving grain, you must report all grain as income. The value of the income is based on what it was worth in USD when it was received. Luckily since SC is using a stablecoin, I am assuming that the value has been consistently (to the point that it has legally been) 1 grain = $1. Please correct me if that is only conceptual and the price has actually fluctuated marginally. This makes things pretty easy and reduces bookkeeping which is great. (kudos!)
Anyways, it might be nice / responsible for SC to explicitly verify these tax implications and distribute information to those who have received grain this year (perhaps in a nice year-end report that can be used for reference in tax preparation). I would be totally willing to help create this type of simple report and maybe bake in automation so that it is automatically prepared at the end of every year. (and maybe automatically distributed in some fashion? idk I’ll slow my roll on that one, but it could be nice)
An additional side question I have is whether people are using SC grain to convert to Ethereum as an investment/gamble? I’d be curious to have a sidebar with those folks around the doubly complicated tax implications of that as well – however, I understand that specific aspect is well outside of SC’s concern.
Summary:
Question: Does anyone know with a good amount of certainty what the US tax implications of receiving SC grain are?
Action: Proposal to make this information super available and clear to those who receive grain so they don’t get in trouble with the IRS.
