Mark Kohler explains why crypto you earn or mine gets taxed as self-employment income, not capital gains, hitting you with roughly 15% in FICA taxes alone. He recommends using an S corporation to cut that tax burden.
If you're generating crypto, you're earning crypto in some unique way. You're going to pay self employment tax because you're in charge of this crypto mine, you're going to be the one charged with that self employment tax. That's 15%. Then you have fed tax, then you have state tax. And you're not getting capital gain treatment either. So when I have clients that are creating cryptocurrency or digital assets, gamers that are playing video games, earning crypto, I want that money to go into an S corporation. It's a great strategy to save on that fica, the self employment tax and build it moving forward. Because you really have a business. You have a business making earning crypto digital assets.
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