How do I report Cryptocurrency Mining income? TurboTax Support

I embarked mining cryptocurrencies this year, but I can’t figure out how to report them – can anyone help mij?

Why do you want to report this?

This is an area where there is not much ter the way of guidance. However, see the affixed listig for some commentary on this area:

Why do you want to report this?


34 people found this helpful

You have two different income rivulets to consider.

When you mine the coins, you have income on the day the coin is “created” ter your account at that day’s exchange value. You can report the income spil a hobby or spil self-employment. If you report spil a hobby, you include the value of the coins spil “other income” on line 21 of form 1040. Your capability to deduct any expenses is limited — expenses are itemized deductions subject to the 2% rule.

If you report spil self-employment income (you are doing “work” with the intent of earning a profit) then you report the income on schedule C. You can fully deduct your expenses (if you can prove them) (see straks). The netwerk profit is subject to income tax and self-employment tax.

Your 2nd income stream comes when you actually sell the coins to someone else for dollars or other currency. Then you have a capital build up (if they were worth more when you sold them than when you mined them) or you have a capital loss (if they are worth less when you sell them). And the build up or loss will be taxed differently if it is a brief term build up (you held it one year or less) or long term (more than one year). You will need to keep track of each coin you create (date, value) and when you sell it (date and value).

And of course, if you instantaneously sell the coin for metselspecie, then you only have income from the creation, you don’t also have a capital build up or loss.

Now, spil far spil expenses are worried, if you are doing this spil a schedule C business, you can take an expense deduction for rekentuig equipment you buy (spil depreciation, subject to all the rules) and your other expenses (mainly electrical play, maybe a huis office). But you need to be able to prove those expenses, such spil with a separate electrified peettante or at least having your laptop equipment plugged into a portable electrified peettante so you can tell how much of your electrified bill wasgoed used te your business. Unless your expenses are very high, they won’t offset the toegevoegd self-employment tax, so you will very likely pay less tax if you report the income spil hobby income and leave behind about the expenses. (On the other arm, if you report it spil self-employment and pay SE tax, that adds to your credits te the social security system which may permit you to qualify for a higher retirement benefit. Having self-employment income on schedule C also permit you to rechtsvordering some tax deductions like an IRA that you can’t eis if all your income is hobby or “other” income. So there may be benefits to paying SE tax ter the long run.)

If you earn more than a duo thousand dollars vanaf year you will need to think about making estimated tax payments spil well.

Related movie: Slushpool mining pool – Nvidea GPU – Cudaminer worker tutorial

Leave a Reply

Your email address will not be published. Required fields are marked *