I recently found out that the IRS has stated that rewards earned from staking cryptocurrencies are taxable. This is important for those who receive tokens from proof-of-stake networks. I’m curious about how this affects those staking cryptocurrencies like Ethereum and Cardano. Should we report these tokens as income once we earn them? Additionally, how should we approach tax planning in light of this information? I’m also interested in understanding how the value is assessed - is it based on the time we earn the rewards or when we sell them? Has anyone faced this before or consulted a tax expert regarding crypto staking?
Been dealing with staking rewards for two years now - you’re taxed when you receive the tokens, not when you sell. I learned this the hard way because I thought it was only taxable at sale. Whatever the fair market value is when you receive them becomes your cost basis for capital gains later. Most exchanges give you timestamps and values, but if you’re running your own validator node, you’ll have to track everything manually with historical price data. I screwed up my first filing and had to get a crypto CPA to fix it. Once my staking income hit a certain amount, I had to start making quarterly estimated payments too, so keep that in mind.
Totally feel you on this! It’s a headache for sure. Just remember to account for what those tokens were worth when you got em. I used a simple sheet too, helped keep things from getting messy. Better safe than sorry with the IRS!