Paying Employees In Cryptocurrency? Don’t Forget Employment Taxes

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Written by William Byrnes | Posted in Paying Employees In Cryptocurrency

The IRS released a reminder last week for business clients who opt to pay employees in cryptocurrency. Employers who choose to pay wages in cryptocurrency should remember that their choice of payment method is immaterial when it comes to calculating employment taxes. Employment taxes must be paid on the fair market value of cryptocurrency paid as wages, measured using U.S. dollars on the date the employee receives the payment. The fair market value is subject to FICA, FUTA and federal income tax withholding–and must be reported on the employee’s Form W-2. Wages paid in cryptocurrency may also be reportable for state income tax purposes. Employers are liable for these wages, so it’s important that small business clients who opt to pay employees in increasingly popular virtual currency be aware of their withholding and reporting obligations. Read More

William Byrnes

William H. Byrnes has achieved authoritative prominence with more than 20 books, treatise chapters and book supplements, 1,000 media articles, and the monthly subscriber Tax Facts Intelligence. Titles include: Lexis® Guide to FATCA Compliance, Foreign Tax and Trade Briefs, Practical Guide to U.S. Transfer Pricing, and Money Laundering, Asset Forfeiture; Recovery, and Compliance (a Global Guide). He is a principal author of the Tax Facts series. He was a Senior Manager, then Associate Director of international tax for Coopers and Lybrand, and practiced in Southern Africa, Western Europe, South East Asia, the Indian sub-continent, and the Caribbean. He has been commissioned by a number of governments on tax policy. Obtained the title of tenured law professor in 2005 at St. Thomas in Miami, and in 2008 the level of Associate Dean at Thomas Jefferson. William Byrnes pioneered online legal education in 1995, thereafter creating the first online LL.M. offered by an ABA accredited law school (International Taxation and Financial Services graduate program).