1. Sales of bitcoin are recorded as the sale of intangible property with a resulting capital gain or loss. The sale is long term or short term depending on your holding period. You use the "Stocks, Mutual Funds, Bonds, Other" interview in TurboTax and tell TurboTax that no 1099-B was received.
2. Bitcoin awarded to you either as fees or for creating a block are recorded as "revenue" on Schedule C. You convert the bitcoin at an appropriate US dollar amount at the time of the award.
3. Mining is simply "revenue" vs. "costs". The actual sale of bitcoin is a separate matter as discussed in 1. above.
4. That's really impossible to say with any precision. Net income reported on Schedule C - revenue minus cost of creating that revenue - is taxed at your marginal "ordinary" income marginal rate. Plus, that net income is subject to Self Employment tax, (Social Security and Medicare), at about 15%. Probably figuring tax at about 25% - 30% for federal purposes would be fine. State tax, if any, is extra.amount
5. Just being "employed" doesn't mean you are not subject to Self Employment taxes. There is a maximum amount of income subject to Social Security, ($127,200), but no maximum income subject to Medicare.
Tom Young
