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Get your taxes done using TurboTax
Yes, you are correct in thinking the tax law will become more clear each year as it pertains to crypto transactions. They do not refer to staking as interest income currently. The reporting can be done exactly as instructed by our Tax Expert @JamesG1.
In tax law the meaning behind the following statements is whether you performed a service to earn this money. You physically, not your money earning money for you. The difference is 'earned income' and 'unearned income' which are treated very differently on the tax return and under tax law.
- Did Crypto Staking involve work like your main job?
- Did the Crypto Staking involve an intent to earn money?
The IRS defines earned income as:
- Taxable income you earned as an employee, such as wages, salaries, commissions, and tips
- Profits from operating your business or farm
- Long-term disability pay, if received before the minimum retirement age
- Union strike benefits
The IRS also gives you the option of treating nontaxable combat pay (code Q in box 12 of your W-2) as earned income for the Earned Income Credit (EIC).
The IRS defines unearned income as:
- Taxable income from investment-type income such as taxable interest, ordinary dividends, and capital gain distributions.
- It also includes unemployment compensation, taxable social security benefits, pensions, annuities, cancellation of debt, and distributions of unearned income from a trust
Please update here if you have more questions and we can help.
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