How does FICA affect taxes on cryptocurrency transactions?

3 answers

• Jan 02, 2022 · 3 years ago
  Sure! FICA is a federal law that requires employers and employees to contribute to Social Security and Medicare. When it comes to cryptocurrency transactions, FICA can affect taxes in a few ways. First, if you receive cryptocurrency as payment for services, it may be subject to self-employment taxes under FICA. Additionally, if you sell cryptocurrency and make a profit, you may be required to pay capital gains tax, which is not directly related to FICA. However, if you use the proceeds from selling cryptocurrency to pay self-employment taxes, FICA may indirectly impact your tax liability.
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• Jan 02, 2022 · 3 years ago
  FICA, also known as the payroll tax, is primarily focused on traditional employment income. However, when it comes to cryptocurrency transactions, the IRS has provided some guidance. According to the IRS, if you receive cryptocurrency as payment for services, it is treated as self-employment income and subject to self-employment tax under FICA. This means you'll need to report the income and pay both the employer and employee portions of Social Security and Medicare taxes.
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• Jan 02, 2022 · 3 years ago
  Ah, FICA and cryptocurrency taxes, an interesting topic! While I can't speak for other exchanges, at BYDFi, we always encourage our users to consult with a tax professional for guidance on how FICA affects their cryptocurrency transactions. The IRS has provided some guidelines, but it's important to remember that tax laws can be complex and subject to change. It's better to be safe than sorry when it comes to reporting your cryptocurrency income and complying with FICA regulations.
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