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The IRS has released updated guidance on how cryptocurrency mining is taxed. This guide explains what you need to know to comply with taxes on crypto mining.
October 10, 2019 · 2 min read
In the US, the IRS originally released cryptocurrency guidance in 2014 and followed it up on October 2019 with additional cryptocurrency tax guidance.
The way cryptocurrency mining income is taxed depends on whether you are a hobbyist miner or a self-employed (business) miner. Here are some of the measures that the IRS provides for determining which camp you are in:
As you can see, there is some amount of subjectivity to the classification. For example, if you operate a mining farm full-time you are more likely to be categorized as a business. If you are randomly doing some mining on an old computer, you are probably a hobbyist. In both cases you will need to report your mined coins as taxable ordinary income and your basis will be the fair market value at the time you receive the coins.
CoinTracker allows you to mark any received coins (from the Transactions page) as "Mined" so you can see the amount of mining income you have (on the Tax page), in addition to the capital gains which are already tracked separately.
Note: the rules are different in different countries such as Australia, Canada and the United Kingdom
CoinTracker helps you calculate your crypto taxes by seamlessly connecting to your exchanges and wallets. Questions or comments? Reach out to us @CoinTracker
Disclaimer: this post is informational only and is not intended as tax advice. For tax advice, please consult a tax professional.