item 5: brace for new work.
by hitendra patil
pransform inc.
you may need to start asking your clients about bitcoin. new irs guidance treats bitcoins and other crypto-currencies not as money, but as property, for tax purposes and applies immediately to all returns. see the full text of notice 2014-21 (pdf).
among other things, the irs advised that:
- as an employer, if you pay wages in bitcoins:
- you must report it on a w-2.
- you must ensure income tax withholding.
- you must ensure payroll taxes deduction.
- if you pay contractors and service providers in bitcoins, such payments are taxable and self-employment tax rules generally apply.
- if you make a payment of $600 or more in a taxable year to an independent contractor for the performance of services, you are required to report that payment to the irs and to the payee on form 1099-misc, miscellaneous income.