The fact of the matter is that the IRS has not provided guidance on how income from crypto staking should be taxed or reported.
Notice 2014-21 is where we get most of our current information about reporting crypto transactions, mining and other income. It doesn't mention staking even once.
The IRS has made just a few points clear:
- Crypto is not currency.
- Crypto is property.
- Most crypto transactions result in reportable income.
- The crypto you receive is taxable income and where you report it on your tax return depends on how you received it.
In this atmosphere of uncertainty, the conservative approach is report your staking rewards as "Other taxable income" in the year that you receive them.
If you want to report your staking income as Other taxable income:
- Select Federal on the left side menu.
- Select Income and Expenses toward upper left.
- Expand/ scroll down the list and find the section called, Less Common Income.
- Scroll all the way down and select Miscellaneous Income, 1099-A, 1099-C.
- Select Other reportable income at the very bottom.
- Answer Yes and click Continue.
- Enter a description and amount on this page, click Continue.
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