The IRS has ruled that staking rewards only become taxable once the taxpayer "acquires the ability to transfer, sell, exchange, or otherwise dispose of the cryptocurrency."
You will need to convert your staking rewards to US dollars if they have not been issued as U.S. dollars. Here is how to enter your staking rewards in TurboTax Desktop H & B as other income:
- Across the top of the screen, select Personal.
- Across the top of the screen, select Personal Income.
- Select I'll choose what I work on.
- Scroll down to Less Common Income.
- To the right of Miscellaneous Income, 1099-A, 1099-C, click the Start / Revisit button.
- To the right of Other reportable income, click the Start / Revisit button.
- At the screen Any Other Taxable Income, select Yes.
- At the screen Other Taxable Income, enter a description such as “Cryptocurrency rewards” and an amount.
The entries will be reported:
- on line 8z of Schedule 1 of the Federal 1040 tax return, and
- on line 8 of the Federal 1040 tax return.
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