All Posts

Hello,   I have a crypto staking rewards question.   At what point is crypto staking rewards deemed taxable income?   I would like to start staking on a certain blockchain (for the sake of this question we can call it Project A or PA for short).   From my research on this topic I came across the key phrase "Dominion and Control" that has led me here to seek clarification. Keep this phrase in mind as I layout the example below for the staking process of PA.   I have 1,000,000 PA tokens (note that right now I can freely transfer / sell them since they are not staked - I have full Dominion and Control of them) I decide to stake all 1,000,000 PA tokens to Validator A Validator A provides a 5% APY Rewards are given out every 12 minutes At the end of the year if I remained staked the whole time I would get 50,000 PA tokens as a reward Terminology: "Dominion" - I interpret this as ownership - I have ownership of my initial staking amount and the rewards I receive due to the cryptography of the blockchain "Control" - I interpret this as being able to freely transfer / sell my tokens (initial staked amount and rewards)  With the above shared, the following are the steps needed to stake (note that along the way I will share if I have Dominion and Control of my rewards): I execute a "stake" transaction - specifying that the 1,000,000 PA tokens are to be staked to Validator A the "stake" transaction succeeds Now that I am staked I, at any time, am freely able to execute an "unstake" transaction. This "unstake" transaction will be laid out below in more detail. Since I am now staked I cannot freely transfer / sell any of my tokens - I have Dominion of my initially staked tokens due to cryptography but I do not have Control because they are locked up / staked and I cannot sell them. 12 minutes go by and I get a tiny reward (we can call it "Reward #1") - I have Dominion of these rewards due to cryptography but I do not have Control of them because they are locked up / staked and I cannot sell them. 12 more minutes go by and I get a tiny reward (we can call it "Reward #2") - I have Dominion of these rewards due to cryptography but I do not have Control of them because they are locked up / staked and I cannot sell them. This goes on for a full year After the year is done I decide to stop staking I execute an "unstake" transaction - specifying that the 1,050,000 PA tokens are to be unstaked from Validator A and given back to me The "unstake" transaction succeeds At this time I am now unstaked. I have Dominion of my initially staked tokens and the rewards due to cryptography but I do not have control (ie I cannot sell them) because they are held for a cool down period of 12 days. The 12 day cool down period has now passed I execute a "claim" transaction The claim transaction succeeds I now have full Dominion and Control of my initially staked tokens and the rewards because I can now freely transfer them and or sell them At what point in the above process do I claim my staking rewards as taxable income?  

I used to do Backdoor Roth Conversation for all IRA contribution (Contribute to Traditional IRA first, then immediately transfer to Roth IRA, almost no gain for traditional IRA, maybe a little interest.   How if I make contribute to traditional IRA, and broker matches 3.5% on IRA contribution (up to $280/year), and I want to transfer all the money to Roth IRA. How does it work with tax filing?   I don't even know when match amount will be released? Soon after contribution or 365 days after premium subscription or 5 years later?   The bottom line is --- I don't want to make tax filing too complicated.