@fig
looks like I will claim as personal income and do a sole PP (later). But for now, pending my site dev and while I try to make things work, I guess I will just add as personal income.
looks like I will claim as personal income and do a sole PP (later). But for now, pending my site dev and while I try to make things work, I guess I will just add as personal income.
just remember the bit about self-employment tax. you're considered self-employed if you run a business as a sole proprietor. that means you may have to pay the 15.3% self-employment tax on net business income and file schedule SE with your tax return. this is in addition to your personal income tax owed:
You said "capital gain/loss occurs when you sell for USD. it doesn't matter when you transfer to your bank account."
So at the exchange level, I would have to sell, then it converts to USD. Does that mean I pay for both capital gain and personal income on each transaction seperately? And if that is the case, would't that make using bitcoin as payment more expensive then simply getting paid in USD?
So at the exchange level, I would have to sell, then it converts to USD. Does that mean I pay for both capital gain and personal income on each transaction seperately? And if that is the case, would't that make using bitcoin as payment more expensive then simply getting paid in USD?
no, taxable events are just triggered at different times depending on type of income. you don't get double taxed.
for capital gains:
your customer buys a good with bitcoin. the market price at the time of purchase = your cost basis. when you sell those bitcoins, you take [final sale price] - [cost basis] = capital gain/loss.
for personal income:
you take [gross business income] - [deductible business expenses] = net business income. if you are a sole proprietor, this amount gets added to your personal income on form 1040.
