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<p>[QUOTE=&quot;Troodon, post: 361156, member: 4626&quot;]I&#039;m not a CPA, yet, but I am a senior college student studying accounting... so can give you a somewhat qualified opinion (however I still suggest you consult a CPA for the particulars; I&#039;m reasonably confident I&#039;m correct but I take no reasosibility for any trouble you have with the IRS should you act on my advice and it turn out to be wrong!)</p><p><br /></p><p>You only need to pay self-employment tax if you are in fact, self-employed.&nbsp; May sound obvious... but what that means is you have to have some sort of registered business or be a self-employed contracter to be considered self-employed.&nbsp; Any income you make from self-employment, less expenses, is subject to both normal taxes at your marginal rate and self-employment tax (basically, you&#039;re paying the social security taxes that an employer would have paid half of, were you employed by someone else).&nbsp; There is a threshold for this... if your self-employment income times 0.9235 equals less than $400, you don&#039;t have to pay any SE tax on it (though it&#039;s still subject to normal income tax at your marginal rate).</p><p><br /></p><p>If you&#039;re not really self-employed... if the income you earn is really just from a hobby, it&#039;s miscillaneous hobby income.&nbsp; It&#039;s taxed at your marginal rate, but not subject to SE tax.</p><p><br /></p><p>Usually the dividing line between a hobby that happens to produce income and self-employment has to do with the relative volume of income it produces in proportion to your total income.&nbsp; Check with a CPA to figure out whether your earn enough income from it to be considered self-employment or not.</p><p><br /></p><p>Other difference between a hobby or a business, is a business can claim a net loss (for up to 7 consecutive years; past that point it&#039;s reasonable to expect you&#039;ll close up shop rather than contimue to operate an unprofitable business, therefore the IRS quits letting you claim a loss for that business past that point).&nbsp; You can deduct hobby expenses from hobby income, but at best you can only break even; even if your hobby expenses exceed your hobby income, you can not claim a net hobby loss.</p><p><br /></p><p>There may be certain times where the sale of a coin for a profit can be considered a capital gain (or a loss, if sold at a loss).&nbsp; It depends on the nature of the sale and the item... again check with a CPA on this if you have any questions about it...</p><p><br /></p><p>It&#039;s also theoretically possible, if you use the profit from coin sales just to buy more coins, that it can be considered a like-kind exchange, allowing you to defer the realization (and thus the tax) on the gain.</p><p><br /></p><p>If the gains you make are relatively insignificant the IRS may just consider ot below the level of administrative convenience (like when they don&#039;t bother to tax free coffee your employer provides as income).</p><p><br /></p><p>If I havent&#039; said it enough, if you have enough income from coin sales to be reasonably concerned about the tax consequences, consult a CPA (especially one that specializes in taxes) before you file your tax return.&nbsp; This info is a guideline only and what you&#039;re required to claim on your taxes can differ greatly depending on your individual situation.[/QUOTE]</p><p><br /></p>

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