Want to learn more? Get crypto tax help from our crypto tax guide.
For guidance on how to import staking transactions with our template or manual entry, read here: How to Import Staking with Our Template Format.
How are crypto mining and staking taxed?
Crypto mining and staking is taxed as income. If you mined bitcoin or other cryptocurrencies or received rewards from crypto staking, then you are subject to income tax on what you earned.
In the United States, per IRS guidance, crypto mining is to be treated as ordinary income using the total fair market value of the currency at the date of receipt. This means that mining proceeds are reported as income, not capital gains.
You receive 0.5 BTC on from bitcoin mining on Mar 14 of this tax year
BTC is $3854.25 a coin on this date.
You are liable for $1927.25 in income for that particular reward (0.5 * $3854.25).
The cost basis for that 0.5 BTC is then established as $1927.25. You realize any capital gain or loss on this 0.5 BTC when you sell, exchange, or spend it, based on whether the price goes up or down from this cost basis.
The same applies for staking rewards via proof of stake coins. Any crypto received as staking rewards should be recognized as income, and the cost basis is set to that amount.
How to calculate crypto mining and staking taxes
You must know the fair market value at the time of receipt for every time you received mining or staking rewards. You then report your overall income of the tax year on your tax return.
If you haven’t been noting down the time and value of each reward, that’s okay. Many people are using crypto tax software to automatically import their mining data and to calculate the fair market values.