All depends on the tax treaty between the US and your country, to properly avoid double taxation. Commonly referred to as foreign income exclusion. Say between Canada and the US, if you do not have a W8BEN (most commonly, as an accountant I’ve noticed a lot of Canadian investments as partnerships/etc in US oil/gas companies, foreign dividend sourced investments, etc.) signed, you are automatically to be remunerated with 15% tax with held at source (US co.). If you do, you may additionally report that WBEN income, and receive the equivalent Canadian tax credit (which is to your benefit) - and the difference of earnings is forwarded between the Canada Revenue Agency & the IRS, ie: the treaty; after tax revenue. So per se, whatever income & expenses you claimed, the profit of said activity, in terms of taxable $s, is shared from Canada (CRA) to the US (IRS), and vice versa annually.
That’s why the W8BEN only comes into play at $500+, otherwise it’s too trivial for the tax man to care. In Canada, you are actually required to claim any income over … lol… really $10. And institutions are required to submit a receipt for any amounts over $50 (main case, bank interest), and further more any annual income over $500 has to be tested for employment relation(s)/tax-on-split-income-think family, etc., and not just claimed as contractual income.
However, you should govern yourself accordingly. As technically, per sey in Canada, token income (considered a commodity) is treated as daily as you may receive it, thereafter adjusted for capital gains/losses upon sale… so it’s a really tedious process to properly report. It’s technically also considered General Sales Tax taxable (GST/HST), just to make matters even more fun (including crypto mining) for any trailing quarter annualized to exceed $28k. There are different options on exchange rate conversions, some could be considered static, real-time rate at the exact time of exchange, and another option being the daily exchange rate at noon for that day, and the last option a general averaged ‘prescribed’ rate for the entire year, as published by your home country. It can be advantageous to calculate the least income between all three of those options. Same goes for gains/losses on account of capital, but they must be homogeneous ordered; with one method applied to both sides of that equation.
Generally for people who average a few thousand dollars a year in anything crypto, I just advise them to pay tax on REALIZED income less expenses, and not bother with the namby pamby capital adjustment & claims necessary because they are generally oblivious to the extensive costs they’ve gotten them selves into by day trading fun crypto garbage. ie: they would owe my company more than they even made to calculate it properly.
Just saying, I think I did right, I mean I did some things but… - isn’t an excuse. However, the amount of storj you could possibly earn per year is rather negligible, so you kinda safe just to claim ignorance.
Crypto … in my accounting experience is just another gambling tax on the ill informed and poorer segments of the public. “If it wasn’t for Bingo and lottery winnings - we couldn’t afford to stay on welfare!”
2 cents,
Julio
