Should I Pay Tax On My Steem Dollars?
The tax man wants your money. Here's what you need to know.
The IRS says crypto currency like Steem is a property, and therefore subject to tax. The main view is you have to treat it like a capital gain, same as if you sold a rental property or shares in a company.
The gain you have to declare is the US dollar value at the time of sale, and you can deduct anything you pay for it. The bad news is that if you earn Steem, you pay tax on the whole amount. However, there is some good news. This gain isn't taxed until you trade it into something which has a US dollar value. This means your Steem dollars are safe, but once you trade it into Steem and then Bitcoin, there is a taxable event. If you are mining Steem you may have a business and need to pay tax on all Steem mined as it arises.
How will the tax man ever know about it? If you're going to try and get away without declaring the tax just be aware people can get caught by 1. An unrelated question on their return which requires bank statements to be given to the inspector, 2. Suspicious neighbors who report you because their pissed off you just drove up in a Porsche bought with all your Steem.
Those are the general rules. You need to look at your own tax situation and see how they fit. More info from the IRS is at https://www.irs.gov/pub/irs-drop/n-14-21.pdf.
Hope this helps and keeps you safe!
If you're earning rewards here on Steemit, for US income tax purposes, it's considered revenue which has to be reported at fair market value in the year teh reward is earned. That also becomes your basis for when you trade out of crypto and into USD to determine your capital gain. It's actually got two steps, not just one.
I have a whole series called US Tax Considerations on my blog where I go into it in more detail. My most recent was about capital losses from trading crypto.
Thanks for clarifying. Everyone should have a look at your series. I think a lot of people might be unaware.
I guess until it becomes actual dollars you are fine. There is a blurred line in most countries.
Different countries may have different rules. They have the rule book so they can decide to tax it how they want. What you probably won't often see is a decision to treat it as tax free!
Thank you, that's good to know.