What you need to know about cryptocurrency and filing your taxes
If you’re thinking of investing in cryptocurrency, plan to pay taxes on what you earn. Here’s how you’ll be taxed and what you’ll owe.
Andrea Kramar and Hye-Su Jun, USA TODAY
PORTSMOUTH — Residents seeking to make payments to the city can now do so using cryptocurrency through PayPal, according to Mayor Deaglan McEachern.
“There’s waves of new things that are going to affect us in terms of our future that use the type of technology used in cryptocurrency,” McEachern said Monday. “I want to make sure Portsmouth is not waiting around to see how this is going to affect us in the future, because it’s already affecting us.”
A cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend, according to Investopedia. They enable secure online payments without the use of third-party intermediaries.
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Portsmouth residents can’t directly pay their property tax bills or make other payments to the city using cryptocurrency at this point, McEachern acknowledged.
Instead, people will have to use PayPal, which is a payment vendor the city has been accepting for months, according to Nancy Bates, a revenue administrator/tax collector for the city.
“City customers who have cryptocurrency stored in their PayPal account can now make payments to the city using that cryptocurrency when they choose PayPal as their payment method,” she said in a memo to City Manager Karen Conard. “This new payment method has no impact on the city’s financial practices as the cryptocurrency is converted to U.S. currency by PayPal before it is sent to our payment processor.”
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McEachern brought the idea to city officials as a way to embrace “the underlying technology” used in cryptocurrencies.
“By creating more ways to pay bills, we’re enabling greater participation,” he added.
He asked for his one-time $500 bonus for being elected mayor to be delivered in cryptocurrency as a way for him to learn more about the process.
He hasn’t received it yet, but when he does he will convert it to cash and donate the monies, McEachern said.
“It’s something I’ve been interested in and because we’re a small city, we can move quickly and try this,” he said.
He believes ultimately cryptocurrencies will be “transformational for financial services,” but in the short term it can help people “that are under banked in America.”
“If we can remove some friction from that process, I’d love to be able to bring that to Portsmouth,” he said.
He noted there are “already credit cards that allow you to tap into cryptocurrency.”