What You Need To Know About Paying Employees Using Cryptocurrency 

What You Need To Know About Paying Employees Using Cryptocurrency

Mar 07, 2022

Cryptocurrencyheader.png

Employers interested in offering wage payments in cryptocurrency should be aware of and comply with applicable withholding, wage and hour, and wage payment requirements at the Federal and State levels. Although employers can not currently pay employees’ base salaries, hourly pay, and overtime pay in the U.S., they may offer bonuses or incentive payments in cryptocurrency. Additionally, employers can use a third-party cryptocurrency payment processing company (e.g., Bitpay) or conversion service rather than paying wages directly in cryptocurrency.

Federal Withholding and Tax Issues

Since there is fluctuation in the value of cryptocurrency, the fair market value of virtual currency paid as wages, measured in U.S. dollars on the date of receipt, is subject to federal income tax withholding and social security and Medicare (FICA) and Federal Unemployment Tax Act (FUTA) taxes and must be reported on Form W-2, Wage, and Tax Statement.

The IRS issued Notice 2014-21, 2014-16 I.R.B. 938, explaining that virtual currency is treated as property for Federal income tax purposes and providing examples of how longstanding tax principles applicable to transactions involving property apply to virtual currency. The IRS does consider virtual currency paid by an employer as remuneration for services to be wages for employment tax purposes. 

Wage/Hour and Wage Payment Requirements

The Fair Labor Standards Act (FLSA) requires wages to be paid in “cash or negotiable instrument payable at par.” Cryptocurrency is not considered to be either. In other words, base wages—such as salary or minimum wage—and overtime pay must be paid in a currency issued by a government. Most states have similar requirements. Employers that have made payments of base wages and overtime pay in cryptocurrency might not be in compliance. Paying bonuses and other incentive payments in cryptocurrency may be allowed, however.





Category List


Tag List

Social Security Withholding (3)
Sage Summit 2015 (1)
Payroll Reporting (13)
Tax Identification Number (2)
Review (2)
CIO (3)
w-4 (2)
Top 10 (3)
Growth (1)
irstaxtip (1)
ACA Reporting (4)
ACA (6)
1099-G (4)
Withholding (1)
remote office (2)
Awards (1)
CP2100 (3)
Economic Security Act (1)
1099 (9)
CV Magazine (1)
Social Security Number Verification (3)
1099 NEC (5)
Affordable Care Act (3)
Payroll Software (6)
IRS Form 941 (3)
IRS Notice 931 (1)
Employee Retention Credit (2)
Innovation (2)
Reporting (1)
IRS Form W-3C (1)
EEO-1 (3)
Payments (1)
IRS Form 1099 NEC (3)
Accounting Solutions Provider (2)
New Logo (1)
Future (1)
Cryptocurrency (1)
Medical Leave (1)
Employee Travel (1)
Social Security Wage Base (2)
IRS 941 Form (2)
Sage (1)
B-Notice (2)
HIPAA (4)
ACA Compliance (3)
Accounting Solutions (2)
Electronic W-2 (1)
IRS Form 1099 (3)
IRS Form 7200 (1)
Improvements (1)
Filing (1)
Sage Summit 2014 (1)
Tax Identification Number Verification (2)
Employee Tax Credits (1)
Year-End Deadlines (2)
Reports (1)
Rebranding (1)
Federal (1)
vaccine (2)
Paycheck Protection Program (1)
SSA (2)
IRS 7200 Form (1)
workplace dynamics (2)
Payroll (15)
IRS Form W-2 (6)
Tax (2)
Secure eFiling (2)
Windows (3)
Aatrix Software, Inc. (5)
Staff (1)
work from home (1)
Millennials (2)
2020 IRS Form W-2 (2)
1099-PATR (1)
Employee Documentation (1)
Helpful Hints (1)
Retirement Contribution Limits (1)
TUG (1)
e-File (1)
CA Pay Data Report (1)
Travel During Covid (1)
cyber attacks (1)
ACA eFiling (3)
e-Filing (1)
Top Software (1)
Infrastructure (1)
employee retention (4)
Payroll Tax Relief (1)
941 (4)
IRS Form 941 & 940 changes (3)
Top 100 (2)
Sponsorship (1)
Tax Return (1)
Child Tax Credit (2)
Assessment (4)
Ultimate Payroll (1)
Payroll Tax Reporting (8)
HFSA (1)
Safe eFiling (1)
EFTPS (1)
Forms (1)
Initiatives (1)
Standard Mileage Rate (1)
Quarterly Reports (1)
Sage 300 CRE (1)
Per Diem (1)
Tax Payments (1)
Recruiting & Retention (4)
Medicare Tax (1)
Labor Shortage (1)
1095-C (2)
Technology Companies (2)
Aatrix eFile (8)
SOC2 (4)
Mac (1)
1099 G (1)
Dependent Care (1)
unemployment (5)
IRS Form 941 Changes (2)
ACA e-filing (3)
American Rescue Plan (1)
Top 50 (1)
Sage Summit (2)
State (1)
Venmo (1)
Aatrix (6)
CV Technology Innovator Awards (1)
IRS Forms (1)
Compliance (5)
IRS (4)
State Payroll Reports (3)
Payroll Tax (3)
eFiling (3)
New Hire Reporting (3)
HSA (1)
Solutions (2)
Paypal (1)
CIO Review (3)
1099-MISC (1)
The Families First Coronavirus Response Act (1)
OEM Payroll (2)
Enterprise (2)
I-9 (2)
Web Forms (1)
1094-C (2)
W-2 (8)
Certified Payroll Reports (1)
Travel Expenses (1)
1099 TIN Matching (4)
Workplace Efficiencies (1)
Sage Solutions Provider (1)
1094-B (2)
IRS Notice (2)
Coronavirus (2)
SMBs (1)
payroll reporting changes (2)
Accountant Shortage (1)
eFiling Thresholds (1)
Cloud (1)
Payroll Reports (16)
1095 (4)
Fraud (2)
Sick Leave (1)
covid (2)
Security (5)
ACA 1095 C&B requirements (2)
Coronavirus Aid (2)
IRS Tax Forms (2)
TIN Matching (4)
Payroll Compliance (4)
Payroll Tax Notice (2)
Solution (3)
1099-INT (1)
Form 941 (1)
IRS 7200 Tax Form (1)
Technology (3)
Families First Coronavirus Response Act (1)
PTO Payout (1)
HR (1)
1099-K (2)
Payroll Tax Forms (3)
Federal Payroll Reports (2)
Human Resource (1)
TIN Matching Services (4)
Business Travel (1)
Company Of The Year (1)
Payroll Solution (6)
Small Business (2)
SSA Notice (2)
eFile (6)
1095-B (2)
Aatrix Software (9)
Sage Solutions (1)
Social Security Tax Deferral (1)
COVID-19 (8)
IRS 1099 NEC Form (2)
Paycheck (2)
Corrections (1)
SOC3 (2)

Tag Cloud

Labor ShortageCP2100Payroll Complianceemployee retentionPayroll Tax NoticeForm 941payroll reporting changesHSAAatrix SoftwareEconomic Security ActSafe eFilingAccounting SolutionsPayroll ReportsSocial Security Number VerificationSage SummitCertified Payroll ReportsWithholdingTIN Matching ServicesPayroll SolutionAatrix eFileunemploymentMedicare TaxPayroll Tax FormsEmployee DocumentationPayroll ReportingeFilingVenmow-41099 NECHRElectronic W-2941EEO-1SOC2SMBsSolutionHIPAASSA NoticeSecurity1099-MISCRebrandingNew Hire ReportingHelpful HintsPTO PayoutPaycheckAccounting Solutions ProviderWorkplace Efficiencies1099-KACAcyber attacksIRSAssessmentCoronavirus Aidremote officecovidTax Identification Number VerificationACA 1095 C&B requirementsPer DiemAmerican Rescue PlanTax ReturnPaypal1099-GSocial Security WithholdingTop 50Travel During CovidAatrixACA eFilinge-Filing1094-BCA Pay Data ReportIRS 941 FormFormsSage SolutionsTravel ExpensesThe Families First Coronavirus Response ActCOVID-19CV Technology Innovator AwardsTop SoftwareCompany Of The YearSage Summit 2015CIOSmall BusinessCorrectionsOEM PayrollReviewIRS Notice 931CV MagazinePaymentsFamilies First Coronavirus Response ActEmployee TravelInitiativese-FileUltimate PayrollPayrollStateSecure eFilingCoronavirusIRS 7200 FormW-2eFileComplianceFilingIRS Form 941 ChangesIRS Form 941 & 940 changes1099 TIN MatchingTaxvaccineBusiness TravelPayroll Tax ReportingI-9B-NoticeAwardsEmployee Retention CreditChild Tax CreditTax Identification NumberMillennialsIRS FormsFraudSocial Security Wage Base2020 IRS Form W-2Sage 300 CRETechnology CompaniesQuarterly ReportsWeb FormsPaycheck Protection Program1095Payroll SoftwareSOC3SageState Payroll ReportsStandard Mileage RateRecruiting & RetentionAccountant ShortageCIO Reviewwork from homeSick LeaveImprovementsIRS 7200 Tax FormSolutions1095-CIRS Form 1099 NECTop 100SSAFutureSage Solutions ProviderStaffFederal Payroll ReportsWindowsGrowthIRS Notice1099-INTSponsorshipEmployee Tax CreditsFederalReportsirstaxtipTax PaymentsPayroll Tax Relief1099-PATR1094-CACA e-filingeFiling ThresholdsReportingSage Summit 2014Payroll TaxDependent CareIRS Form 7200EnterpriseHFSACloudMedical Leave1095-BTUGMacYear-End DeadlinesIRS 1099 NEC FormIRS Form 1099ACA ComplianceIRS Form 941EFTPSInnovationHuman ResourceAffordable Care ActACA ReportingSocial Security Tax DeferralTop 10New Logo1099Aatrix Software, Inc.Retirement Contribution LimitsIRS Tax Forms1099 GTIN MatchingTechnologyInfrastructureCryptocurrencyworkplace dynamicsIRS Form W-3CIRS Form W-2


Archive