Overview
Many people have more than likely seen on there news feed that PayPal will begin accepting cryptocurrency soon. While i like many was initially excited to hear the news. Upon reading terms of service everyone's favorite pass time. I happen across the Tax consequences which are applied to cryptocurrency sale and any gain or loss occurred when sold. This is an important issue ill attempt to address in this article as well as potential positives of PayPal's cryptocurrencies hub.
Disclaimer
The following is informational only and is not intended as financial/Tax advice. I'm not a financial advisor nor qualified to give tax advice.
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As common practice with exchanges PayPal charges a fee for sale or purchase of cryptocurrencies. There is not a fee for holding/ Hodling your crypto. They stipulate that their exchange rate is an estimated spread which ill list below. Going on to state that they will not separately calculate or disclose the spread they have earned on each transaction.
Purchase or Sale amount/Fees
$1.00-$24.99 USD/ Fee $0.50 USD
$25.00-$100.00 USD/ Fee 2.30% of amount
$100.01-$200.00 USD/ Fee 2.00% of amount
$200.01-$1000.00 USD/ Fee 1.80% of amount
$1000.01 + USD/ Fee 1.50% of amount
For those unaware a spread is The difference of the price of a currency between the buyer and seller at the time of transaction.
Taxes
According to PayPal's cryptocurrency terms and conditions or their PayPal terms of service (TOS) on the cryptocurrencies hub.Its the users responsibility to determine what taxes if any that apply to transactions made using your Cryptocurrency hub. Stating they will provide (IRS) forms 1099 when its determined the transaction require tax filings or payments.
Link to (IRS)official site
IRS 1099K instructions
Taxable events that is outlined in PayPal's transaction history statements are useful they don't cover everything and shouldn't be relied upon for calculation of taxes on their own. This is why users should keep detailed records of transactions such as Time and price purchased at and time and price sold for. Due to the information being reported on 1099k's being insufficient to fill out:
(IRS) PDF Forms:
Form 8949
Schedule D
Other concern's
According to PayPal's (TOS) at the time of launch the service will not allow users to withdraw their cryptocurrency to their own wallets
When a user is closing an account PayPal's (TOS) PayPal will inevitably sell users crypto which as previously stated triggers a taxable event.
PayPal's history with profiting form Forex spreads (when users send money to different currency accounts/different countries) shouldn't be overlooked.
Possible Pro's
While not great for those whom have a better understanding of the cryptocurrency market and subsequent taxation as it applies to their own region. The integration of crypto in to PayPal's services may lead to wider scale acceptance of cryptocurrency. Increasing the accessibility or normalcy may get investors or markets that previously may have been uninvolved involved/included.
Essentially the basic supply and demand principles apply to a individual cryptocurrencies value. Given PayPal's broad appeal and audience their integration to the crypto market could realistically increase prices of BTC, ETH, ect...
Disclaimer
The article above is informational only and is not intended as financial/Tax advice. I'm not a financial advisor nor qualified to give tax advice.
Images credited to
lead image provided by:
Pixelbay.com/user/raphaelsilva
Second image provided by:
Pixelbay.com/user/mohamed_hassan
