August 30, 2021
As technology advances and people around the world gain more access to its availability the way business transactions are handled is evolving. From a cash only system to checks, credit and debit cards to cryptocurrency and paying for items with your phone, the entire nature of making purchases is changing. However, not only is the world different for customers, but those on the receiving end of these funds are also having to make adjustments - particularly to their tax returns.
While reporting income has always been commonplace and one of the sole purposes behind filing a tax return, keeping up with non-cash transactions can be tricky. Fortunately, for many of the most commonly used programs there are available features to make tracking the income and expenses rather easy. AsÂ peer-to-peer payment (P2P) platformsÂ continue to evolve from simple money exchanges to full on business transactions, reporting any income derived from their merit should be handled just as any similar action would have been previously.
One of the three leading P2P companies, PayPal has been around for over a decade but during this time they have built one of the best operating platforms and most well trusted sites of any organization attempting to enter this space. Used initially for transferring funds, PayPal is now available on nearly every consumer website and can be used for businesses to conduct their sales. Keeping up with these transactions and having the ability to transfer income to your tax return has also improved with systematic tracking methods.
Another leader in the space, Venmo is more commonly used for strict P2P payments. Out with friends and need to split the check, simply Venmo the individual who picked up the tab. Sold some concert tickets, get paid with Venmo. However, there are instances where individuals are operating boutique shops and/or selling certain merch while collecting via this method. These payments constitute as income and should be reported as such during the filing period.
Another unique form of monetary value isÂ cryptocurrency. While both PayPal and Venmo are leaders in the P2P exchange, cryptocurrency is an entirely different financial function. These funds are derived from encrypted exchanges and are considered a virtual currency. The process is extremely safe but the â€œmoneyâ€ is only available in a digital form - making reporting to a tax return a little more complex.
The leader in cryptocurrency, BitCoin may not technically be recognized as a formative way of handling transactions but theyÂ do have value. As it has grown over the past decade, the disbursement of BitCoins has increased considerably and individuals are finding methods to increase their accounts over time. Though cryptocurrencies are vastly different from paper money, theÂ effects of virtual currencies can have an impact on your tax returnÂ when used for services, purchases, or investments and is required to be reported as such.Â
The tax and financial experts atÂ Bloch Rothman and AssociatesÂ are ready to answer any of your tax questions or assist you and/or your business today. In addition, they can also take care of multiple other issues dealing with paying or owing back taxes, required audits from other entities besides the IRS, or any other personal or corporate wealth management issues. Along with providing a quality tax service, our group can also complete tax returns or answer any other factors associated with financial issues or concerns you may have.
Serving in Denver and all of the surrounding areas for 35 years, our firm has an extensive history in helping clients with any and all of their tax issues or dealings with the Internal Revenue Service. If you have questions about your personal, business, estate or any other filings, donâ€™t hesitate toÂ contact usÂ today. Available for all of your tax needs and filings, there are also a number of bookkeeping and payroll services offered to assist you and your business. We look forward to meeting you and serving whatever your needs may be soon!