Does anyone here have a clue how TO PAY TAXES FROM EARNINGS on STEEMIT?
 | Benjamin Franklin said there were only two things certain in life: death and taxes |
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Hi everyone,
My goal for today WAS to create an article about masternodes and explain what is it about and why so many people fear investing in masternodes, comparing many of them to ponzi scheme. But this topic will have to wait another few days. So stay tuned and check my profile again in a week or so :)
Reason for this last minute change of article was inspired by one of my steemit collegues.
Just a moment ago, I came across a post written by @richardgerald that attracted my attention: "What I can do to promote steem". Seeing that Richard is struggling to get any engagement I decided to help and promote his content. Especially since he touched on a subject that bothered me a lot lately related to taxes on steemit.
So if you have a chance then visit his latest post and show some support:
https://steemit.com/steemjet/@richardgerald/what-i-can-do-to-promote-steem
"What I can do to promote steem?"
This is one of the many questions I've been asking myself recently. Since I strongly believe in the future of Steemit I would like to see it grow bigger. That's pretty obvious, but how do we achieve this? Did you guys ever try to bring new people onto this platform and explain what Steemit is about and how is it different it is from traditional blogs/social media platforms?
Within the past few weeks I went through a number of conversations with random people and I attempted many times to explain what Steemit is and what are advantages of this platform over their "traditional competition" (facebook/twitter etc). At the end of the day I realized that I already abandoned being active on other social media platforms since I joined Steemit. Allocating most of my time to build my follower base on steemit allowed me to achieve results I could never achieve with facebook / twitter. That's a fact. So helping steemit grow bigger is important to me for obvious reasons.
I've also realize that I've huge difficulties while talking to people not familiar with blockchain technology and cryptocurrencies. I've tried and failed so many times that I already lost count. So today I really would love to know your ways of explaining how does Steemit works and how to earn money whenever you're dealing with non-tech person with very little idea about blockchain and crypto?
Taxes and steemit payments
What really attracted my attention was the fact, that @richardgerald in his post mentioned that steemit allows to receive non-taxable payments:
Steem as a cryprocurrency has a very unique and stable block chain. This blockchain is tax free
Getting the freelancer platform not to only accept steem as it's currency but also to run on the most trusted and tax free blockchain is the aim
As much as I agree with his reasoning, I also found it dangerous to assume that one day we will not become a victim of tax offices. At the moment it seems to be one of the safest ways to transfer funds using blockchain technology. It's almost like double-layer payments. Instead of sending BTC to a friend, I can purchase steem, transfer it to my steemit account and then send those funds to account that belong to a friend of mine. He will receive funds and just then exchange them to BTC. Obviously it's going to be harder for anyone to trace down such a payment.
That actually brought some worries as steemit seem to be the perfect place for money laundering. Can we really safely assume that we wont have to pay taxes and penalties for all received SP/SBD? I really would love to hear what's your thought on that issue.
At the end of his post Richard mentioned his dream:
Maybe someday I wall also own a store on the steem blockchain
I must admit that I thought about it several times as well. I dont think this technology is ready to be adopted into online shops yet. Maybe in the near future. Especially once SMT will be introduced. But shouldnt we be even more scared and worried? As long as steemit isn't big and isnt attracting goverments/regulators attention and we may sleep calmly. That I know.
Final questions:
Does anyone here ever worry that all our received rewards and completed payments done on steemit will be taxable and some of us can get in trouble for "avoiding taxes"? Please share your view on that issue with me as I would love to know your opinion.
Luckily Im way to small to actually earn any decent amount of funds here, but there are many big players who earned fortunes on Steemit. Should they be afraid? Should we be afraid too?
Cheers,
Piotr
Each government has rules of its own.
Steem, due to its transparency, is not a perfect platform for money laundering.
Bitcoin may be, for those whom do not have a problem to create a new Bitcoin address for each transaction.
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hi @stimialiti
you're right. this platform is to transparent. but if you mix transfering bitcoin and then at some point moving it into steemit, transfering withing steemit and withdrawig again - then wouldnt it make it even harder to trace?
thanks for your comment mate
I believe it will make it harder for you than for the investigator that will try to track you.
Why involve Steem or even Bitcoin, when there are privacy oriented currencies such as Dark Bytes, ZCash, ZeroCoin, PIVX, Monero?
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This was the vote that I got initially
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And then you destroyed it with this vote
Im not sure what do you mean @stimialiti
I bought bids using this bot, and it worked well, until it replaced its votes with much smaller votes, which undid 99% of its work retroactively.
If you viewed the full context, you would have gotten a better clue to what has happened.
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I must admit that Im a bit confused.
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thank you @stimialiti for another awesome comment
I will admit that I know very little about privacy oriented currencies. I know that they exist only. Thanks for pointing me out in right dirrection
yours
Piotr
My knowledge is not better.
I only know some names.
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0.01 SBD0.1 SBDor higherI wrote a blog post about the same issue https://steemit.com/taxes/@divyanthj/how-exactly-does-taxes-from-steemit-income-work
I'm not worried about taxes from steemit income because I'm going to consider only withdrawals from my steemit account as income. Here's why.
Let's say you are a manager of a company that is also in control of the budget and incentives. You have your own money invested in it. You make some budgetary decisions that yield profits. Since you control the budget, you also decide how much of it ends up in your pocket. So ultimately, you are charged a corporate tax that's on the profit calculated AFTER considering the bonuses you pay for yourself. If all of the profit ends up in your pocket, your business isn't paying any tax. You are the one paying income tax.
Although there are no laws and regulations on how steemit accounts are supposed to be treated (since they aren't registered with the government), I don't think it's unreasonable to treat it as any other corporate account. Just pay taxes on whatever you withdraw. It doesn't matter how much SBD you get from upvotes and how much of it you spend on bots.
That is a good explanation. Moreover, it depends on the tax regulations of specific countries. Therefore, every steemit account user should check the national income and corporate tax to see how it is determined by the law.
I like how responsive you are @xhevat
You mind telling me why you never posted anything? I wanted what's your reason to be here :)
Yours,
Piotr
Put it down in a simple way, the issue arises when the U.B.O. gets the money in his/her own account in the country of residence. Before that moment, they're just a crypto inside an account. The problem, in the end, will be identified not when you receive a reward for an article, but when you have converted BTC to FIAT in your Coinbase (i.e.) and transfer them to your bank account. At that point you need to refer to the jurisdiction of the country, one thing could be to officially ask the question to the Inland Revenue Dept. Here - but I say here and not elsewhere - after 60 days without a reply from a public office you're authorized to proceed and consider it as a go (silence is confirmation rule). It may be considered as a capital gain or interests. There's still debate if the BTC is money or not, go figure.
Amazing comment @f3nix
Thank you for taking the time to reply. I appreciate it a log.
I never knew about those 60 days. Is it general rule?
ps.
you're very responsive which is absolutely great and steemit community surely will benefit by having you here.
if you would ever like to keep in touch and support each other closer, then drop me a message [email protected]. This will allow us to communicate easier.
No pressure of course,
Cheers, Piotr
Yours,
Piotr
Thank you Piotr. I am very new to steemit. I have been reading more about steemit and what you guys are posting. However, i am thinking of starting to post now. I did not have much time lately, that is a part of my reason. I need to learn much more prior to being more active in steemit.
I must say that steemit community seems to be very good and supportive. Anyhow, we all have similar goals in steemit.
Thank you for sharing with me!
Regards,
Xhevat
hi @Xhevat
I agree that steemit community is more supportive than any community I encountered so far.
Thanks for your comment and I hope to hear from you sometimes. If you would ever create any post about crypto/blockchain/AI then please let me know. I will be always happy to support you, comment and upvote :)
Yours,
Piotr
hi @divyanthj
Thank you for sharing this link with me. Excellent post.
That's obviously the best solution. One simple question: how to pay those taxes from steemit? So far it seem that noone has any idea.
Take care,
Piotr
I think strictly from a legal perspective, at least in most countries, they would "require" you to pay taxes on your earnings. However, in many cases they would have a difficult time knowing you have an account without some in depth analysis. I would presume it's quite easy to get away with not paying.
Think about the ways in which your account is tied to the outside world and then think realistically as to how much effort the government is likely to put into investigating you. If you're making $20k deposits from Coinbase frequently and that's not explained in your tax documents when you file, you're likely to be audited. They'll see Coinbase and then they may be able to get information from Coinbase to see your traffic there. In that case they'll see the funds that you transferred from Binance or another exchange. At some point, they may not get more cooperation, but there is a path in blockchain that leads from your deposits to your steemit account if regulators can get their way. Even if they cant link you all the way back to steemit, they can still get you for the deposited funds. However, if you rarely make those deposits and they're small amounts it's much less likely to be looked at.
Another more difficult way to analyze would be to check any social media or email accounts or websites they know about to see if there's any link to a steemit account there. This method is more subjective to each governments regulations. It would also require types of analysis that government's aren't known for being competent enough to perform without third party assistance.
Outside of the realm of regulation is the question of morality. Do governments have a valid claim to your crypto earnings as taxes. Well, an argument could be made that they don't! That argument could also be made in some capacity for your regular fiat earnings, but those are so transparent and regulated that you can't get away with paying them. If you can get away with not paying crypto taxes and you believe morally you shouldn't pay, it becomes a simple risk reward analysis for you to make. That's what it all boils down to for me. Whats the chance they know I have the funds and when I weigh out my moral compass is it more important to fulfill my legal obligations to my government or to keep the product of my labor that has nothing to do with government and use the funds as I deem most appropriate (or perhaps the motivation is to avoid paying because the government funds what you feel are immoral things).
Thank you @mjo for your amazing comment. Im glad you shared your knowledge with us.
Appreciate.
And now it's a difficult part: what are our earnings here? If I earn 50 SBD and some steem after my post will be publish then is it my profit?
Let's say that I've spent 40 SBD on bots. So my earning should be just 10 SBD. But how to differ "costs" from transfering funds to your friends/your other account.
That's very tricky.
Luckily my biggest asset is knowledge and many solid business contacts. Those 2 things cannot be taxed :)
yours,
Piotr
@mjo just one more thing
I've learned that you're very responsive which is absolutely great and steemit community surely will benefit by having you here.
if you would ever like to keep in touch and support each other closer, then drop me a message [email protected]. This will allow us to communicate easier.
No pressure of course,
Cheers, Piotr
Hey Piotr, sorry for the delayed response. I'm doing a little speculating here, but I think it would be something along the lines of what money you've moved out of steemit compared to what money you've invested into steemit. So, if you start a fresh account and buy/import 40 SBD into the system, then you write a post and use all 40 SBD promoting it. Then, you end up with 50 SBD and you transfer that all out of the system. I think you would be correct that the earnings would be 10 SBD.
However, if you were creating content regularly and saved up 40 SBD, then promoted a post with it and got 50 SBD upon payout. I think they would argue that both the 40 SBD you earned previously and the 10 SBD from that particular post were taxable (assuming you transfer all 50 SBD out of the system at that time).
I'm also thinking about this based on my understanding of the US tax system, could be totally different for you. I'll have to dig through more of the comments here to see if this is roughly in line with what others are saying.
thank you @mjo for taking the time to reply to my questions
I appreciate it a lot.
Yours
Piotr
I do not understand why you would want to pay taxes. Government and political action have done absolutely nothing to innovate in blockchain technology or innovate at all. The high quality of life many of us do have is only possible through technology--by innovators, not politicians.
My response to your query is that you should not have to pay taxes out of fear of political coercion. Instead, realize that coercion is the only tool the government really has to demand taxes from you. My view and that of many steemians is that we definitely want to keep Steemit.com a coercion-free zone.
hi @impatientoptim
Thank you for your kind comment.
Thats interesting point of view. I think paying taxes is a must if you want easy life, without tax officers suddently tearing your life apart.
Just checked your profile just to realize that we seem to share a number of interests :)
In particular that we both share a similar passion towards cryptocurrencies and blockchain technology :)
I will follow you closely :) Take care, Piotr
No problem. I honestly enjoyed your post. Because it is an important topic.
I think that many State officials would like to think they can tear your life apart. I only encourage you to remember that your flesh and the derivatives of your life (property) are ultimately yours. Nobody should have the authority to tear your life apart, specially not States.
hi @impatientoptim
thank you for your kind words. I also believe that for many people out here this is an important topic.
I wish it would work that way.
ps.
you're very responsive which is absolutely great and steemit community surely will benefit by having you here.
if you would ever like to keep in touch and support each other closer, then drop me a message [email protected]. This will allow us to communicate easier.
No pressure of course,
Yours
Piotr
Thanks for opening the communication. I have noted down your contact (you can edit out if you'd like). I will reach out to you later.
Have a great week, my new Steemit friend.
I love to see how responsive you are @impatientoptim
big thx! :)
Good food for thought! I think that this is going to be an increasingly important topic in the coming years as the Steemit chain grows. I think it will eventually get noticed. If there’s one thing that governments can’t stand is when the average person finds out how to pay less or minimal/no taxes.
One particular aspect I wrote about in a comment recently was the fact that many people are taking fiat currency and changing it into crypto; this is a gain for crypto and a net loss for fiat currency. When the losses grow to the levels that it’s noticeable that the average person is doing it not just the crypto early adopters the governments will look for any excuse to steal someone’s earnings.
nice notices
thx @sergeant05
hi @cmplxty
thank you for your time and effort you put into that comment. I appreciate a lot.
I also think that until Steemit is small, we dont have to be worried to much. But one day it will change. And it will if steemit will be growing.
ps.
you're very responsive which is absolutely great and steemit community surely will benefit by having you here.
if you would ever like to keep in touch and support each other closer, then drop me a message [email protected]. This will allow us to communicate easier.
No pressure of course,
Cheers, Piotr
Cheers,
Piotr
Thanks I will! I have questions about the platform and intricacies that I still don’t understand.
It’s true though, Steemit is small with having a million unique accounts spread across the 6.5 billion people in the world so I guess we certainly have more time before the governments come to take our earnings!
good morning @cmplxty
Im glad to see that you're so very responsive.
From my understanding less than 10% of those accounts are even active at all. so steemit is still super little comparing to twitter/facebook
all the best :)
Yours, Piotr
Yes that’s true, and of those how many are bots? Hope we get as long as possible before the tax notifications come.
Governments should not have anything to do with it i think. Does it matter if we earn shells or crypto? Steem is not a government issued currency so how can they tax it? Just my current thoughts on it.
hi @j85063
Thank you for your comment. I think that as long as we dont earn to much shells or crypto we should be able to sleep just fine.
Thx again for sharing your thoughts
Cheers, Piotr
Wow, this is very interesting