Currently, self-employment tax is at 15.3% in the US.”Īdditional negatives to paying with the Coinbase Debit card include: If you receive crypto as a form of payment as an independent contractor, you’ll have to pay a self-employment tax on top of your income tax. “If your salary is in crypto, the IRS considers the fair market value of crypto in US dollars at the date of your receipt for federal income tax and payroll tax calculation purposes. In addition, the tax implications of getting paid in crypto-in order to load funds onto a Coinbase debit card-are complicated. Failing to report crypto-to-crypto transactions.Using the wrong form to report cryptocurrency transactions.Improperly reporting cryptocurrency received from air-drops, forks, and splits.Tax attorney Guinevere Moore warns crypto investors of 10 crypto tax mistakes to avoid including: It’s easy to imagine that some users will say “I know there are tax implications-I’ll deal with them.” It may not be that simple. You will be required to report gains or losses from your use of the card on your tax return.” This means that each time you use your card and sell cryptocurrency, you will be have sold property in a taxable transaction. “The IRS classifies cryptocurrency as ‘property’ for tax purposes. The tax implications to paying with cryptocurrencies through a Coinbase debit card is (and should be) a deal killer for many consumers. The changes to the program are a good step forward, but they don’t- and probably could never-address a big pitfall to paying with crypto: The tax implications. Coinbase is offering customers the ability to have some or all of their paycheck deposited into Coinbase with no fees on direct deposits, enabling them to receive their paycheck in crypto and spend it without fees. If a customer doesn’t select a reward when the next rotation is launched, they’ll automatically get the reward with the highest crypto-back rate. The crypto exchange revamped its reward program, giving cardholders an opportunity to earn up to 4% back on purchases which will go into a rotating set of crypto assets like Bitcoin or The Graph GRT (GRT). Coinbase eliminated the 2.49% transaction fee. The good news for would-be Coinbase debit card users is that the company has made some improvements to the card regarding: “You’ll have to take a number of factors into consideration, including taxes, transaction fees, rewards, refunds, and accepted merchant categories.” Last year I noted that you’d have to be crazy to make a retail purchase using your bitcoin, ethereum, dogecoin-or any cryptocurrency-with a Coinbase debit card: But doing it with the Coinbase debit card presents issues and concerns that many people will find hard to navigate. Ok, so consumers want to make retail purchases using their crypto holdings. There is untapped potential for crypto owners to use it to make purchases instead of using more traditional payment alternatives.” Still Crazy After All These Fees “Interest in using cryptocurrency to pay for purchases is a reality. Regardless of how crypto owners made their crypto-based retail purchase, the study concluded that:
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