Dear lightning heads ⚡, give it to me straight. Are there tax or other implications to running a routing node in the US? I'm just a simple merchant right now, I want to only accept lightning, but I know if I want to have more reliable inbound capacity I may have to route. Don't sugar coat it, hit me!
Thanks. 💣🦜
Routing as a merchant doesnt really make sense , lease capacity, swap out or simply ask ppl who would like to earn some ppm from providing you liquidity atm
cool, that is what I've been doing.. ok. 🤔
You can also automate it with our stack at https://bolt.observer
The implication is that you get less of your transaction stolen by taxation when you use lightning
I think enforcement of tax law will be key. If it were me considering a POS system I would incentivize Lightening payment with price breaks, but maintain a fiat register as well. Claim the fiat transactions to legitimize your business with ledger transactions on the fiat side and simply don’t claim cash and lightening income. What Uncle Sam doesn’t know doesn’t hurt him.
Tryin hard to be 'legit'. Appreciate the response. It's online only, nostr only. I just need to know what that entails and/or the state of the dumb laws to the best of my ability.
Having been through an audit, I’m convinced that there is no real way to accommodate the tax system while being fair to yourself. Essentially, if you file your taxes every year (assuming US) claiming that information that has been tattled to the IRS for another party’s benefit, eg. 1099 misc, 1099 B etc, you really can just wait for the audit that likely will never come, let them do all the work, pay the bill, and say oooops, golly gee, I’m just an idiot who didn’t know better. Unless you’re making millions you are very unlikely to make it on the radar. As an option, make a business out of some hobby you spend a lot of money on. File a schedule C, show a loss for 3-5 years fold the company rinse and repeat. It’s a shame, but W2 people pay the vast majority of income tax, while there are thousands of loopholes for the wealthy and businesses. No real surprise there I guess, those who have the gold make the rules.
afaik* (and assuming you are in the US) the official IRS rule is that any transaction involving bitcoin, except transfers between your own accounts as a reportanble transaction.
So if someone paid you via lighting you would need to know the USD market price at the moment of every transaction, as they would be reported as income at that value.
Also, when you spent or converted the btc you would need to know the USD value at that moment and report as either a captol gain/loss (usually as a first in/first out calculation). You can someone game the system on capitol gains tax by selling, then rebuying to capture the loss to get a tax deduction, or accept the gain at a time when you'll pay less in tax for it.
That is all assuming you want to be full legit and have your paperwork ready in case of an audit.
*I am not an accountant, this is info I found while a while back, but I think is still accurate.
Cool, yep, that seems right. I was curious about the routing and whether or not that counts as receiving or not but it sounds like I won't be needing to do that. Still curious what people think about that tho.
