Money earned from cryptocurrencies even for completing small tasks valued as low as $1 USD is taxable, as per the United States IRS [Internal Revenue Service].
In line with a recent official report by ‘The Block’, the IRS’s Office of Chief Counsel revealed a response to a 29th June request for clarification from the tax agent’s own Small Business/Self Employed Division.
The queries centered around whether cryptocurrency earned by a user for performing a microtask via a crowdsourcing or similar platform was a taxable income.
As per IRS senior technician reviewer and memo author Ronald Goldstein, it is indeed taxable “the convertible cryptocurrency received is taxable as ordinary income.”
Goldstein added that cryptocurrency “acts as a substitute for real currency” and is therefore considered property for federal tax purposes as per section 61(a) of the IRS tax code.
An example of micro-tasking included a firm offering to pay workers in bitcoin for processing data or reviewing images.
The worth of cryptocurrencies paid in exchange for microtasks is often small amounts that would be less than $1 USD.
Other examples included downloading an application & leaving a positive review; downloading games and reaching particular milestones; completing online quizzes, or registering accounts with various online services.
In line with the memo, these kinds of microtasks “may offer users with rewards” within some form of cryptocurrency and are thereby subjected to similar regulations as regular money.
The guidance comes at a time when the tax agency has been in crackdown mode to finish suspected crypto tax avoidance, seemingly contradicting the recommendation of its own watchdog.