ToddL99
Expert Alumni

Get your taxes done using TurboTax

As employees, any payment you give them as compensation for services is subject to the same rules as their normal payroll.

 

Income, Social Security, and Medicare taxes must be withheld and reported. All payments (wages, bonuses, taxes, other withholdings, etc.) must be reported in US dollars.

 

You cannot "add" a separate line for cryptocurrency payments - all  payments must be reported in US dollars. 

 

In order to pay your employees in cryptocurrency, you would first have to pay them in $$$ and then "exchange" (sell?)  them cryptocurrency for all or a portion of their dollar-denominated net payroll. Depending on the cost basis of the cryptocurrency at the time you exchange it for payroll $$$,  it may result in a taxable event for your business.