AamilD
Expert Alumni

Get your taxes done using TurboTax

You will answer Yes. If you file a tax return, you must report all your income, no matter how little, and even if you don't get reporting forms.

 

However, did you sell the free cryptocurrency or are you holding it?  If you didn't sell it, you don' have income yet but you will still answer the question as a Yes.

 

Cryptocurrency is treated like property.  You only have taxable income if you sell it for more than you paid for it.  (For example, if you buy a comic book for $1 and sell it for $100, you have $99 of income, but only when you sell.  As long as you are just holding it, it doesn't create income.)

 

So if the exchange gives you rewards in the form of cryptocurrency, it only creates income when you sell.  Since your cost is zero, all the proceeds are taxable income.  But only when you convert it to real money.