“Removing Roadblocks on Your Path to Success”
Income from Virtual Currency is Taxable
It is tax time. We are all thinking about filing our Federal and State Income Tax Returns right now. A major trend in income taxes that you must be aware of is due to the advent of what is called virtual currency or digital money. An example of virtual currency is bitcoin. The use of virtual currency has become a global phenomenon. Tax Attorney Kyle Durand has produced a great video on how to digitize your record keeping at “The Small Business’ Guide to Tax Preparation.”
The IRS and state income tax authorities are doing their best to try to keep up with digital money transactions. Virtual currency does not have “legal tender” status in the United States. Consequently, the IRS treats digital money as property rather than money. Wages paid to employees in virtual currency are taxable income. That means the fair market value of virtual currency is subject to federal income tax withholding, Social Security and Medicare payroll taxes as well as Unemployment taxes. It also must be reported on the employee’s W-2 form. Payments to independent contractors could find the value of their virtual income payments reported to them on 1099 forms.
This is just one of the reasons Pacific Crest Group (PCG) strongly recommends that you use a qualified tax professional to prepare your taxes (see “Finding the Right CPA to Meet Your Needs“).
PCG provides professional services that keep your business focused on your key objectives. We create custom made systems based on creative strategies that are always delivered with exemplary customer service. A PCG professional is happy to meet with you to discuss solutions for your unique requirements to maximize all of your business opportunities.
On another note, PCG is a proud sponsor of the Marin Business Forum. Our next meeting is April 2, 2015 at 5 PM, please RSVP on our site. Our speaker, Dr. Robert Eyler from Sonoma State University will present on the global, national and state economic situation as a context for doing business in Marin County for 2015 and beyond. Attendees will come away with a better understanding of the economic forces likely to shape regional business for the next few years.
About PCG Accounting Services:
Pacific Crest Group helps small and mid-sized businesses throughout the San Francisco Bay Area change their bookkeeping and accounting from a hassle to a strategic resource. We bridge the gap between your books and your business, so that you can intelligently manage your company.
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About PCG HR Services:
We’re the most trusted company when it comes to outsourcing your HR functions. Whether it’s creating onboarding materials and employee development programs, or dealing with toxic employees, we ensure that your business is set up for short and long-term growth.
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If you have any questions about how Pacific Crest Group can help make 2015 a success for your business, drop us a line or call us at 415-461-2586!
Until next month, we wish you the very best and much success in your business.
This newsletter is intended to provide generalized information that is appropriate in certain situations. It is not intended or written to be used, and it cannot be used by the recipient, for the purpose of avoiding federal tax penalties that may be imposed on any taxpayer. The contents of this newsletter should not be acted upon without specific professional guidance. Please call us if you have questions.
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