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The Current Situation Regarding Virtual Currency

By January 9, 2016December 16th, 2022Legal

The IRS is clear that virtual currency, like bitcoin, does not have legal tender status anywhere in the U.S. So, while it may be used to pay for services or products just like “real money,” it may have significant tax liabilities. The IRS treats bitcoin as property rather than currency for tax purposes, reportable in the equivalent value of U.S. dollars.

Therefore, bitcoin received for services by employees are wages for both U.S. income tax and employment tax purposes. They must be reported by both the employer and the employee at fair market value. Traditional tax reporting requirements apply to bitcoin payments.

The IRS has put together an FAQ when it comes to virtual currency and taxes that may be found here.

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