PayPal Launches Checkout With Crypto Service (decrypt.co) 63
PayPal has launched Checkout With Crypto, a cryptocurrency service for merchants across the US, and will roll it out over the next few months. From a report: "This is the first time you can seamlessly use cryptocurrencies in the same way as a credit card or a debit card inside your PayPal wallet," PayPal CEO Dan Schulman told Reuters. Checkout With Crypto service will enable those holding cryptocurrencies on the platform to spend it with all of PayPal's merchants. Supported cryptocurrencies include Bitcoin, Bitcoin Cash, Ethereum, and Litecoin; the payments company will, however, convert the cryptocurrency to fiat money for the actual payment. "We think it is a transitional point where cryptocurrencies move from being predominantly an asset class that you buy, hold and or sell to now becoming a legitimate funding source to make transactions in the real world at millions of merchants," Schulman added. The payments company won't charge their customers for swapping crypto to make the payment. However, there will be a conversion spread, meaning that it might swap the cryptocurrency as lower-than-market rates and pocket the difference -- a common technique by crypto wallet apps with in-built conversions.
No thank you (Score:1)
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Something that really amazed me when I first started investing into stocks is that I have to pay taxes on profits when I sell. But lets give some context.
I'm a salaried employee, and the country I live in already deducts all sorts of taxes automatically from my salary before it even reaches my bank account. So there is the income tax, federal tax, social security tax and whatnot gone, over 40% of what I earn.
This is OK, I'm not against paying taxes. I'm happy to live in a country that works and in which peo
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If I invest in shitty stocks and lose everything, the state will not step in and give me back 25% of my losses,
That would be a "capital loss", which is the opposite of a capital gain, and you absolutely can use it to reduce the tax you owe from other income.
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There is always the question of inflation.
If you have an investment that has been sitting around for a few years, the dollar amount for the value of the thing certainly would have gone up, but so would have the dollar amount for a bread, for instance.
I'm happy to pay income tax on the capital gains once it's been adjusted for inflation and also has had the upkeep and improvements deducted. ;)
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Yes, but nobody knows who a specific address/wallet belongs to, so unless you advertise it somehow, you can remain anonymous.
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That's why you need to have multiple wallets and never transfer between them.
$random_tulip_reference (Score:2)
Hur Hur Hur look how smart I am comparing bitcoins to tulips!
In reality these companies know people are sitting on vast sums of wealth so why not make it easier for them to spend? Oh I can hear the wheels turning and the reply already. But everyone cashing out would crash the price you say! Yeah just like with the real stock market when things happen too quickly. Alarms are sounded and trading is halted.
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Yes, if BTC starts moving too quickly someone will step in and halt trading. Because halting a currency moving is always a sign of strength. And BTC's selling point was it's strong central control and authority.
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Re: $random_tulip_reference (Score:2)
Exchanges will just raise spreads as high as it takes. PayPal won't, customers will have different expectations and just halting trading is the easiest way out when they can't meet them.
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No, it was sarcastic nonsense, because "halting trading" is nonsense for a currency (as opposed to a commodity) that's by definition decentralized and unhaltable.
makes me want to buy a bunch of dollar items... (Score:3)
Sure (Score:1)
HODL is the only way.
Anything else would be stupid.
Just what I wanted (Score:1)
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How to integrate in my DarkWeb marketplace? (Score:2)
sounds like an awesome idea!
and who pays the bitcoin fees and speed setting? (Score:3)
and who pays the bitcoin fees and speed setting?
Does the seller get stuck with the high speed bitcoin fee? Does the seller need to wait an much longer time vs CC card if they stay at the low fee in line with an CC?
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They do the same things gold sellers do, they offer you below market rates but eat those costs of conversion.
Re: and who pays the bitcoin fees and speed settin (Score:2)
It's mostly off blockchain, they are effectively an exchange now (which will freeze your account at the drop of a hat).
If you do a return. (Score:5, Insightful)
Do you get bitcoins back? That may be worth tons more or tons less at time of return? Therefore you can return the item if the bitcoin is worth tons more?
Or do you get the value of the bitcoin at time of return in some fiat currency?
Or do you get the value of the bitcoin in some fiat currency when you purchased the item?
Same as any foreign currency (Score:5, Insightful)
I suspect it will be the same as any foreign currency. Conversion at time of purchase (plus Paypal's conversion spread). Another conversion at time of refund at another rate (plus Paypal's conversion spread). Either the buyer or seller or both will lose money, but never Paypal.
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It's Paypal combining two transactions into one - selling the BTC and buying the item. You can get a return on the item, but it won't undo the first half. (Returning investment assets is not a real thing.) So you'll move the cash they gave the seller back to you.
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That doesn't answer the question. The question is not what is paypal doing to convert, the question is if Paypal will convert back, or refund in the fiat currency.
It might take a while for this to sink in (Score:4, Interesting)
It might take a while for this to sink in, but there are some annoying tax implications involving crypto in the US. If you were to buy something with crypto at Paypal, it's not like buying something with dollars. From the IRS PoV, it's like selling a piece of property and *then* using the dollars you get to buy something. So what? Well, when you sell that property it's going to entail capital gain or loss. In the unlikely even that you've been HODLing since they were effectively free, you now pay a long-term capital gains tax on top of whatever you paid for the item! That's assuming you have no offsetting losses this year. In that case, you could safely make the purchase and simply use up some of your capital loss, but why do that anyway?
People with any serious amount of crypto are certainly finding ways to move it legally outside taxing jurisdictions, but also illegally of course.
At some point, crypto goes in to a bear market and this can get really bad for some people, especially those that received crypto as payment. In that case, the IRS considers the crypto as income at the market value when you received it. So consider the case where you receive 1 BTC in payment and it's worth $50k. You decide to HODL, and at $60k you're OK and can afford to pay the tax, perhaps from other funds. Now what happens if BTC goes to $10k? You still owe the tax on $50k of income because the IRS evaluated it when you received the income, not when you sell the coin. You may not have enough in your accounts to cover the tax, forcing you to sell the coin at the worst time.
I'm not sure what the implications of this are for corporations.
Disclaimer: not financial advice. Not a tax or accounting professional. No position in Paypal, sub $1.00 crypto holdings.
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That is a lie.
Like any other capital gains, your owe taxes on (SoldAmount - BoughtAmount), meaning in your scenario, you would owe taxes on -40k, so nothing.
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IRS FAQs 12 and 14 [irs.gov] on virtual currency transactions. How else would you interpret this?
Oh, I think I see what you're trying to say (Score:2)
I think what you're saying is that you could use the capital loss from selling the coin to offset the income. This is true to some extent, with a few caveats. The biggest one is that you must do it in the same tax year. Woe to the taxpayer who receives the income in 2021, and doesn't realize they owe tax until 2022. I don't think they can't retroactively realize a loss to offset the income.
Aside from that, initially you have the income and of course you can indeed reduce your tax liability by selling at
Re:It might take a while for this to sink in (Score:4, Interesting)
Nope. Not a lie, but only part of the story. Your story is the other half. If you get paid in an asset the IRS will charge you tax on the asset at the time of it being received. That is true in nearly every country (though some countries give you the option of when to take the tax hit). However your part of the story is that the person then proceeds to make a capital loss. That isn't "owning nothing" that is actually having a loss on the books which can be tax offset against the aforementioned income.
It's not different to getting paid in shares. If I get paid in shares I owe tax on the vesting date (or issuing date depending on the country). If those shares go down in value and I sell them I don't owe any less income tax, I will however offset the capital loss on what tax I did pay that financial year.
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In Australia, I think capital losses can only be offset against capital gains but you can carry your capital losses and apply them against future capital gains. So I think you would still be hit for the tax in this scenario.
Re: It might take a while for this to sink in (Score:2)
Like most any other stock grant, when you are payed in Bitcoin, that's taxable income for the year you were paid. After that, capital gains/losses take affect.
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I mean, I don't know why "I made money on X, therefore I have to pay taxes on the money I made" wouldn't apply just because it's "on the internet". If that shocks you, please just don't invest in anything until you understand basics like that.
Meanwhile, you would be right if the sellers (like TSLA) are holding BTC. But they're not. Paypal is sending USD (or Euro) to the sellers after converting he BTC.
Lastly, while I understand people selling BTC for cash to avoid taxes would be a thing, it's illegal and
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I mean, I don't know why "I made money on X, therefore I have to pay taxes on the money I made" wouldn't apply just because it's "on the internet". If that shocks you, please just don't invest in anything until you understand basics like that.
You're missing the point. You're being paid in a capital asset according to the IRS. The GP's example however is not complete. If the bitcoin drops in value and you use it to make a purchase the result becomes a capital loss tax event.
e.g.: You get paid 1BTC, you pay tax on $50k income.
Next year 1BTC is worth $10000USD, and you use it to buy something. You still paid tax on $50k last year, but this coming year you have a $40k capital loss you can offset against whatever income tax you did earn.
The problem c
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I'm not missing the point. The merchants are being paid in dollars. I'm talking about the people who think they don't have to pay money on the capital gains of the appreciated bitcoin. I made that point pretty clear with different paragraphs that talked about the different people.
But yes, if you make $100,000 and then decide you want that money invested in BTC, you owe taxes on that $100,000.
Re: It might take a while for this to sink in (Score:2)
The confusing thing is that you expect it to work like foreign currency, but it doesn't get taxed like one. If I exchange USD for Euros, then Euros go up and I spend them, I have no taxable events. If I do the same with Bitcoin, I now have a taxable event. So now I have to know which Bitcoins I'm using as a cost basis for the capital gains I realize when I buy a stick of gum. It's a massively unworkable system for purchasing small consumer goods.
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Actually, if you exchange USD for Euros, Euros go up and then you spend them, you have a taxable event. It just rarely is enforced at the levels of "you have a few hundred euro left over from your last trip to Europe lying around". Try doing that with a few million and financial institutions that can track it and then see what happens.
Re: It might take a while for this to sink in (Score:2)
No, you don't.
If you are doing finex for profit, you have to pay taxes. You are not required to claim incidental gains or losses from basic currency exchange.
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Do you have a source for that? I know the IRS doesn't require paperwork on, I think, sub $750 transactions. But you're still obliged to pay the tax on it.
Or did you just mean if you are holding them during the course of a vacation or something?
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Now what happens if BTC goes to $10k? You still owe the tax on $50k of income because the IRS evaluated it when you received the income, not when you sell the coin.
That's okay because when you convert the crypto to real money you will make a capital loss that you can offset against the income tax you paid when you were stupid* enough to get paid in bitcoin.
*Stupid here means getting paid in a direct asset when you're not a CEO with an accountant on speeddial, or in fact are an actual accountant. The tax implication of not getting paid in the currency of the country you're doing work is huge. Just don't do it.
Re: It might take a while for this to sink in (Score:2)
Losses offset future gains. They do nothing for past gains. If you wait until the following tax year to realize the loss, you can't offset the original income tax.
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It's not easy, but it's not ridiculously hard either. If you don't want to worry about the tax implications and don't care to HODL, flip any BTC you receive in to dollars immediately and treat it like any other income.
If you want to HODL BTC, it's just a bit more complicated. You need to estimate the additional tax liability from that income, and make sure you have enough cash on hand that you won't touch until you pay taxes. If you've already got enough cash, just HODL. If you don't, then sell just eno
Still waiting for no middle parties (Score:1)
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Of course they are making money in the middle - this is basically a scheme by which you are paying them to buy your crypto from you, in order to have them give you easier access to the value represented by that crypto in order to purchase goods and services. They then hold onto the crypto getting any future gains, or liquidate it as they see fit to cover the dollar expense of the transaction.
The bit I'm curious about is how their exchange rate (read: fee) compares to other exchange fees.