Paid by a client in crypto? How the IRS, HMRC and the CRA tax it (US, UK, Canada)

A client offers to pay your invoice in bitcoin, a stablecoin or another token. For tax, that payment is still income for your work, and the tokens you keep can later bring their own gain or loss. Here's what the IRS, HMRC and the CRA say about valuing crypto you're paid, reporting it, selling it later and the records to keep.

General information, not tax or legal advice. Not written or reviewed by a lawyer or an accountant. The short answer, the timeline, the side-by-side summary, the steps, the checklist, the wording to copy and all the other wording are ours; the official items come from the US, UK and Canadian government pages linked below. This page is about being paid for your own work as a self-employed person. It doesn't cover investing or trading crypto, mining, staking, NFTs you create, employees paid in crypto, US states, Quebec, companies or other countries. It says nothing about whether to accept crypto or what any token is worth. Official pages were read on 2026-10-18.

The short answer

1. It's income for your work in all three countries, and you value it in your own currency.
2. In the US the IRS treats it as ordinary income and, for an independent contractor, self-employment income, at its fair market value in US dollars when you receive it.
3. In the UK HMRC's manual says tokens a business accepts from customers are accounted for within its taxable trading profits, worked out in pounds sterling.
4. In Canada the CRA treats a crypto payment as a barter transaction: you include the value of your work or of the crypto, whichever is more readily valued.
5. Selling, swapping or spending the tokens later is a separate event, with its own possible gain or loss.
6. Records do most of the work: date and time, units, value and how you got it, wallet addresses, and exported histories.
7. Ask an adviser before your first crypto payment if you can.

On this page

• 1. What happens when
• 2. United States: the IRS
• 3. United Kingdom: HMRC
• 4. Canada: the CRA
• 5. Side by side
• 6. Step by step
• 7. Wording to copy
• 8. Records checklist
• Free tools and kits
• Where the sources differ
• When to get advice
• Related
• Sources

1. What happens when

Our summary of sections two to four, not official wording.

Billing a client abroad in another ordinary currency? That's covered in how to invoice international clients.

2. United States: the IRS

• Crypto is property: "For U.S. tax purposes, digital assets are considered property, not currency." "You may have to report transactions with digital assets such as cryptocurrency and non fungible tokens (NFTs) on your tax return. Income from digital assets is taxable." (IRS: Digital assets, page date 02-Sep-2026). "Virtual currency is treated as property and general tax principles applicable to property transactions apply to transactions using virtual currency." (IRS FAQ Q2).
• Paid for your work: "Do I have income if I provide someone with a service and that person pays me with virtual currency?" "Yes. When you receive property, including virtual currency, in exchange for performing services, whether or not you perform the services as an employee, you recognize ordinary income." (IRS FAQ Q9). "Consequently, the fair market value of virtual currency received for services performed as an independent contractor, measured in U.S. dollars as of the date of receipt, constitutes self-employment income and is subject to the self-employment tax." (IRS FAQ Q10; IRS: Frequently asked questions on virtual currency transactions, page date 30-Jun-2026). The IRS digital assets page puts it this way: "If you receive a digital asset in exchange for goods or services in a business context": "The income would be taxed as ordinary income or a loss."
• How much: "The amount of income you must recognize is the fair market value of the virtual currency, in U.S. dollars, when received. In an on-chain transaction you receive the virtual currency on the date and at the time the transaction is recorded on the distributed ledger." (IRS FAQ Q12).
• Finding the value: through an exchange, "If you receive cryptocurrency in a transaction facilitated by a cryptocurrency exchange, the value of the cryptocurrency is the amount that is recorded by the cryptocurrency exchange for that transaction in U.S. dollars." (IRS FAQ Q26). Paid directly, wallet to wallet: "The IRS will accept as evidence of fair market value the value as determined by a cryptocurrency or blockchain explorer that analyzes worldwide indices of a cryptocurrency and calculates the value of the cryptocurrency at an exact date and time. If you do not use an explorer value, you must establish that the value you used is an accurate representation of the cryptocurrency’s fair market value." (IRS FAQ Q27). No published value: "When you receive cryptocurrency in exchange for property or services, and that cryptocurrency is not traded on any cryptocurrency exchange and does not have a published value, then the fair market value of the cryptocurrency received is equal to the fair market value of the property or services exchanged for the cryptocurrency when the transaction occurs." (IRS FAQ Q28).
• Where it goes: "For payments you receive as an independent contractor, report the digital asset income on Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship)." See Schedule C for US freelancers and US self-employment tax.
• The question on your return: "On federal income tax returns, you must answer "Yes" or "No" to a question about digital assets:" "At any time during the tax year, did you: (a) receive (as a reward, award or payment for property or services); or (b) sell, exchange, or otherwise dispose of a digital asset (or a financial interest in a digital asset)?" "Check Yes in the digital assets box if you:" "Received digital assets for:"
  • Payment for property or services provided
  • A reward or award
  • Mining, staking and similar activities
  • An airdrop as it relates to a hard fork
  "If you have digital asset transactions, you must report them whether or not they result in a taxable gain or loss."
• No form from the client? "You must report income, gain, or loss from all taxable transactions involving virtual currency on your federal income tax return for the taxable year of the transaction, regardless of the amount or whether you receive a payee statement or information return." (IRS FAQ Q42).
• When you sell or swap the tokens later: "If, as part of an arm’s length transaction, you provided someone with services and received virtual currency in exchange, your basis in that virtual currency is the fair market value of the virtual currency, in U.S. dollars, when the virtual currency is received." (IRS FAQ Q13). "Your holding period begins the day after it is received." (IRS FAQ Q29). "Yes. When you sell virtual currency, you must recognize any capital gain or loss on the sale, subject to any limitations on the deductibility of capital losses." (IRS FAQ Q4). The digital assets page adds: "If you own and use a digital asset for personal or investment purposes": "The income would be taxed as a capital gain or loss when you sell or dispose it."
• Form 1099-DA: "Use Form 1099-DA to report digital asset proceeds from broker transactions." (IRS: About Form 1099-DA, page date 27-Jun-2026). "Treasury and IRS issued final regulations on reporting by brokers on dispositions of digital assets for customers in certain sale or exchange transactions." "This reporting is required to be made on Form 1099-DA beginning with transactions on or after Jan. 1, 2025." "Brokers must report gross proceeds for transactions effected on or after Jan. 1, 2025." "Brokers must report basis on certain transactions effected on or after Jan. 1, 2026." "The final regulations ensure that taxpayers will receive statements that include information reported to the IRS on Form 1099-DA, Digital Asset Proceeds from Broker Transactions, that will help them file their income tax returns and determine their tax obligations." "The final regulations do not include reporting requirements for brokers commonly known as decentralized or non-custodial brokers that do not take possession of the digital assets being sold or exchanged." Our reading: it reports sales and exchanges made through a broker, so it relates to what you do with the tokens later, not to the client's payment itself. Payment apps and card processors are a different form: see Form 1099-K and payment apps.
• Records: "If you had digital asset transactions, keep records that document:"
  • Your purchase, receipt, sale, exchange or any other disposition of the digital assets
  • The fair market value as measured in U.S. dollars of all digital assets received as income or as a payment in the ordinary course of a trade or business
  "You should therefore maintain, for example, records documenting receipts, sales, exchanges, or other dispositions of virtual currency and the fair market value of the virtual currency." (IRS FAQ Q46).
• Scam warning on the same IRS page: "If you receive a letter with a QR code that claims to be from the IRS and asks you to register your cryptocurrency on a "compliance portal" do not respond. It's a scam." "We don't require registration of digital assets and are not sending these letters." More in freelance payment scams.

3. United Kingdom: HMRC

• Businesses paid in tokens: HMRC's Cryptoassets Manual, written for HMRC staff, says: "If a company or business is carrying out activities which involve exchange tokens, they are liable to pay tax on them." "Such activities include:"
  • buying and selling exchange tokens
  • exchanging tokens for other assets (including other types of cryptoassets)
  • ‘mining’
  • providing goods or services in return for exchange tokens
  "It is likely they will be liable to pay one or more of the following:"
  • Capital Gains Tax (CGT)
  • Corporation Tax (CT)
  • Corporation Tax on Chargeable Gains (CTCG)
  • Income Tax (IT)
  • National Insurance Contributions
  • Stamp Taxes
  • VAT
  "HMRC will consider each case on the basis of its own facts and circumstances." (HMRC CRYPTO40050, page date 2021-03-26).
• In your trading profits: "If the exchange tokens are held as part of an existing trade, profits of a revenue nature will need to be included in the trading profits. For example, if a company carrying on a trade accepts exchange tokens as payment from customers, or uses them to make payments to suppliers, the tokens given or received will need to be accounted for within the taxable trading profits." "HMRC taxes cryptoassets based on what the person holding it does. If the holder is conducting a trade then Income Tax/Corporation Tax will be applied to their trading profits." (HMRC CRYPTO40350, page date 2021-03-26). The example names a company, but the page is about any business, and it says Income Tax or Corporation Tax applies to trading profits.
• Pounds sterling: "The calculation of an individual’s or a company’s taxable profits will be undertaken in pounds sterling." "Any profit or gain must be calculated by converting to pounds sterling using the appropriate rate at the time of each transaction. Reasonable care needs to be taken to arrive at an appropriate valuation for the transaction using a consistent methodology. Individuals and companies must also keep records of the valuation methodology." (HMRC CRYPTO40100, page date 2021-03-26).
• The GOV.UK page on receiving crypto is mostly about employees and mining, staking or lending: "Any cryptoasset exchange tokens (also known as cryptocurrency) you receive from employment, or from activities such as mining, staking or lending count as income." "If you receive tokens as income, you’ll need to keep records and may need to pay:"
  • Income Tax
  • National Insurance contributions
  (GOV.UK: Check if you need to pay tax when you receive cryptoassets, page date 2025-04-28). Self-employed profits go on your Self Assessment return: see UK Self Assessment for freelancers and UK self-employed National Insurance.
• Selling or swapping later: the page on receiving crypto says "If you sell the cryptoasset that you’ve paid Income Tax on at a later date, you should calculate Capital Gains Tax as normal on any increase in the value of the tokens since you received them." The page on selling says "You may need to pay Capital Gains Tax if you make a gain when you ‘dispose’ of cryptoasset tokens (also known as cryptocurrency) by:"
  • selling them
  • exchanging them for a different type of cryptoasset
  • using them to pay for goods or services
  • giving them to another person (unless it’s a gift to your spouse, civil partner or charity)
  "If you’ve paid Income Tax on any part of your cryptoasset token value, then you will not pay Capital Gains Tax on that amount. You’ll only pay it on any gain you make after receiving them." "You must group each type of token you own into ‘pools’ and work out the pooled cost for each type — this is known as ‘pooling’ the costs." (GOV.UK: Check if you need to pay tax when you sell cryptoassets, page date 2026-10-05). If the tokens are part of your trade, HMRC's manual above puts them in trading profits instead; ask an adviser which applies to you.
• VAT, if you're registered: "VAT is due in the normal way on any goods or services sold in exchange for cryptoasset exchange tokens." "The value of the supply of goods or services on which VAT is due will be the pound sterling value of the exchange tokens at the point the transaction takes place." "The VAT treatments outlined above are provisional pending further developments, in particular, in respect of the regulatory and EU VAT positions." (HMRC CRYPTO45000, page date 2021-03-26). Registration itself: see the UK VAT registration threshold.
• Records: "You must keep separate records for the tokens you receive, including:"
  • type of tokens
  • date you received them
  • number of tokens you received
  • number of tokens you have in total
  • value in pound sterling
  • bank statements
  • the details of the disposal — if you dispose of the tokens
  "You may also want to keep other records such as wallet addresses." "HMRC might ask for your records if they carry out a compliance check." Exchange reports help, but "Some cryptoasset exchanges provide reports of your transactions. These can be essential for working out how much tax you owe, but:"
  • they’re not tax calculations
  • they will not keep track of your pooled costs
  "You must keep your own records of your transactions."
• HMRC's staff guidance on records: "Cryptoasset exchanges may only keep records of transactions for a short period, or the exchange may no longer be in existence when an individual completes a tax return." "The onus is therefore on the individual to keep their own records for each cryptoasset transaction, and these must include:"
  • the type of cryptoasset
  • date of the transaction
  • if they were bought or sold
  • number of units involved
  • value of the transaction in pound sterling (as at the date of the transaction)
  • cumulative total of the investment units held
  • bank statements and wallet addresses, in case these are needed for an enquiry or review.
  (HMRC CRYPTO10400, page date 2021-03-26).

4. Canada: the CRA

• Where to start: "The webpages linked below provide general tax information related to crypto-assets." (CRA: Information for crypto-asset users and tax professionals, page date 2025-10-29). "As a crypto-asset user, you have to report your earnings (or losses) on your income tax returns and may have to collect and remit (pay) the Goods and Services Tax (GST) and the Harmonized Sales Tax (HST)." "Based on your crypto-asset activities, you may realize business income (or loss) or capital gain (or loss). Business income (or loss) and capital gain (or loss) are reported differently." The CRA lists "Barter transaction (receiving crypto-assets in exchange for goods or services)" as one way of acquiring crypto (CRA: Understanding crypto-assets and your tax obligations, page date 2025-11-10).
• Paid for your work: "Since cryptocurrency is not government-issued currency, using cryptocurrency as payment for goods or services is treated as a barter transaction for income tax purposes." "Generally, you are considered to have disposed of cryptocurrency if you use it to pay for goods or services from a vendor. On the other hand, the vendor must include in their income the value of the goods or services provided or the value of the cryptocurrency accepted as payment, whichever is more readily valued." (CRA: Reporting income from crypto-asset transactions, page date 2025-12-03). Business income goes on the statement of business or professional activities: see Form T2125 for Canadian freelancers.
• Value: "The fair market value is generally the highest price, expressed in dollars, that a willing buyer and a willing seller (who are both knowledgeable, informed, prudent, and acting independently of one another) would agree to in an open and unrestricted market." "In all cases, you must use a reasonable method for determining the value of your crypto-assets, even when a direct value is not readily available. Generally, whichever method you choose, use it consistently from year to year and keep a record of how it was used to calculate a value." (CRA: Determining the value of crypto-assets for tax filing, page date 2025-11-10).
• Selling, swapping or spending later: "A disposition of a crypto-asset may occur when you do any of the following:"
  • Trade or exchange it for government-issued currency or another type of crypto-asset
  • Use it to buy goods or services
  • Transfer ownership of it by way of gift or donation
  "Some transactions do not result in a taxable disposition, such as transfer of crypto-assets between wallets that you own." "Generally, if a crypto-asset transaction is not made on account of business income, it would be considered capital in nature." "Whether you are carrying on a business or not must be determined on a case-by-case basis and consider all the factors of your transaction." For business income, the CRA page points to Guide T4002.
• GST/HST, if you're registered: "If you are a GST/HST registrant and your business accepts crypto-assets as payment for taxable property or services, you must calculate the value of the crypto-asset for GST/HST purposes based on its fair market value at the time of the transaction." "To support your tax filing, keep all records that show how you calculated the fair market value." (CRA: Collecting and remitting GST/HST from crypto-asset transactions, page date 2025-11-10). Registration itself: see GST/HST: when to register and how much to set aside.
• Records: "If you engage in crypto-asset transactions, you have to keep adequate books and records to support each transaction. This applies to individuals and businesses." "Crypto-asset transaction information includes:"
  • The number of units and type of crypto-asset for each transaction
  • The date and time of each transaction
  • The value of the crypto-asset (in Canadian dollars) at the time of each transaction
  • A description of the nature of each transaction and the other party to the transaction (even if it is just their crypto-asset address)
  • The addresses associated with each digital wallet used
  • The beginning wallet balance (and its cost) and ending wallet balance for each crypto-asset for each year
  "If you use crypto-asset exchanges or other custodial platforms, you should keep books and records of the following information:"
  • Trade ledgers (buy, sell and swaps)
  • Transfer ledgers (deposits and withdrawals of crypto-assets and traditional, government issued currency)
  • Records supporting any other types of transactions that took place on the exchange
  "You are responsible for keeping all required books and records for at least six years from the end of the last taxation year to which the records and books of account relate." "If you use crypto-asset exchanges or other custodial platforms, regularly export a history of your activity to make sure you have adequate books and records in case the exchange ceases operating, stops offering services in Canada, or you lose access to your account." (CRA: Keeping books and records of crypto-assets for tax filing, page date 2025-11-10).

5. Side by side

Our summary of sections two to four, not official wording.

6. Step by step

Our order of steps, based on sections two to four — not an official checklist.

1. Before you agree, settle with the client which token and network, whether the price is in your currency or in tokens, whose rate counts, and who pays network fees.
2. Put those terms on the quote or invoice, as in the note below.
3. Confirm your wallet address with the client through a second channel, and treat any request to change payment details with suspicion.
4. When the tokens arrive, record the date and time, the units, the transaction ID and the value in your own currency, with where the rate came from.
5. Use the same valuation method each time, and keep a note of it.
6. Count that value as business income, alongside your bank and card payments.
7. Keep track of the tokens you still hold: selling, swapping or spending them later is a separate event.
8. Export the history from each wallet and exchange regularly, not just at the end of the year.
9. In the US, answer the digital assets question on your return; in the UK and Canada, work in pounds or Canadian dollars.
10. If you are registered for VAT or GST/HST, work out the tax on the value of the tokens at the time of the sale.
11. Ask an accountant or a tax adviser before your first crypto payment, or as soon as you can after it.

Changed wallet or bank details are a common scam: see "our bank details have changed". Whether income counts when you invoice or when you're paid is in cash vs accrual accounting.

7. Wording to copy

Replace everything in [brackets]. This is ours, not from any agency, and it's not legal or tax advice.

Crypto payment note for the invoice

Price: [amount] [your currency code].
This invoice can be paid in [token name] on the [network name] network.
Wallet address: [your wallet address]. Please confirm this address with me by [phone / video call] before your first payment. I won't change it by email alone.
Number of tokens: the price above at the [token] rate shown on [rate source] when you send the payment.
Network fees: paid by [you / me].
If the tokens are worth less than the price when they arrive, the difference stays due in [your currency code].

A record for each crypto payment

Crypto payment received
Invoice: [invoice number]
Client: [client name], paid from address [sending address]
Received: [date, with the month written as a word] at [time and time zone]
Token and network: [token] on [network]
Units received: [number of units]
Value when received: [amount] [your currency code], from [rate source and how you looked it up]
Transaction ID: [ID from the blockchain explorer or the exchange]

8. Records checklist

Our summary of the official pages above, not an official checklist.

• The quote, invoice or agreement for each crypto payment
• Date and time each payment arrived, and its transaction ID
• Token, network and number of units
• Value in your own currency when received, and where the rate came from
• Your wallet addresses and the address the client paid from
• Wallet and exchange histories, exported regularly
• Each later sale, swap or spend: date, units, what you got and the fees
• A note of your valuation method

For the rest of your day-to-day records, see how to track freelance expenses. Not sure your side work is a business yet? See hobby or business?

Free tools and kits

• Our free invoice generator and receipt generator run in your browser; nothing you type is sent or saved. You can paste the crypto payment note above into the invoice generator's notes. Neither tool values tokens or records them.
• Our paid Freelance Billing Kit by Small Rows (US$12, one-time) keeps each invoice's number, client, issue date, amount paid and paid date on the Invoices tab, in the one currency label you type in Settings (amounts aren't converted). If a client pays in crypto, you can enter the value you worked out in your own currency. It doesn't record tokens, units, wallet addresses or exchange rates, value tokens, work out gains when you sell them, or file anything with the IRS, HMRC or the CRA.
• All three kits together: the All-Kits Bundle by Small Rows (US$24, one-time).

Where the sources differ

• Words: the IRS says digital assets and virtual currency; HMRC says cryptoassets and exchange tokens; the CRA says crypto-assets.
• Value: the IRS wants the fair market value in US dollars when received and accepts a blockchain explorer value; HMRC asks for a sterling rate at the time of each transaction with a consistent method; the CRA says to include the value of your work or of the crypto, whichever is more readily valued, using a reasonable method consistently.
• Kinds of guidance: the HMRC pages on businesses are staff manual pages last updated in an earlier year (in Sources), and the GOV.UK page on receiving crypto is aimed mainly at employees and mining, staking or lending. HMRC calls its VAT treatment provisional.
• Form 1099-DA: broker reporting is still being phased in, and the IRS page describes relief for brokers. Our note that it isn't about the client's payment itself is our reading, not an IRS statement.
• What we did not check: US state taxes; IRS notices and rulings behind the FAQs, and the IRS publications they link; payments through crypto payment processors; stablecoins, NFTs and tokens a client created; HMRC's pooling and valuation pages in detail; Revenu Québec; companies and partnerships; the EU and other countries.

When to get advice

• before you accept your first crypto payment, or if crypto becomes a regular part of your income;
• the token has no published price, or it's an NFT or a token the client created;
• you were paid through a crypto payment processor or a platform and aren't sure who reports what;
• you hold the tokens for a long time, or trade them, after you're paid;
• you're registered for VAT or GST/HST, or close to the threshold;
• you lost access to a wallet, or an exchange you used closed;
• you live in one country and your clients are in another.

Talk to an accountant or a tax adviser where you file. This page is general information only.

Related

• Schedule C for US freelancers
• UK Self Assessment for freelancers
• Form T2125 for Canadian freelancers
• Form 1099-K and payment apps
• How to invoice international clients
• Freelance payment scams

Sources

• United States: IRS: Digital assets (page date 02-Sep-2026) · IRS: Frequently asked questions on virtual currency transactions (page date 30-Jun-2026) · IRS: About Form 1099-DA, Digital Asset Proceeds from Broker Transactions (page date 27-Jun-2026)
• United Kingdom: GOV.UK: Check if you need to pay tax when you receive cryptoassets (page date 2025-04-28) · GOV.UK: Check if you need to pay tax when you sell cryptoassets (page date 2026-10-05) · HMRC Cryptoassets Manual CRYPTO40050: which taxes apply (businesses) (page date 2021-03-26) · HMRC Cryptoassets Manual CRYPTO40350: business income paid in cryptoassets (page date 2021-03-26) · HMRC Cryptoassets Manual CRYPTO40100: conversion to sterling and accountancy (page date 2021-03-26) · HMRC Cryptoassets Manual CRYPTO45000: VAT (page date 2021-03-26) · HMRC Cryptoassets Manual CRYPTO10400: record keeping (page date 2021-03-26)
• Canada: CRA: Information for crypto-asset users and tax professionals (page date 2025-10-29) · CRA: Understanding crypto-assets and your tax obligations (page date 2025-11-10) · CRA: Reporting income from crypto-asset transactions (page date 2025-12-03) · CRA: Determining the value of crypto-assets for tax filing (page date 2025-11-10) · CRA: Keeping books and records of crypto-assets for tax filing (page date 2025-11-10) · CRA: Collecting and remitting GST/HST from crypto-asset transactions (page date 2025-11-10)

Checked 2026-10-18. Found a mistake? Tell us via Support.