[Crypto Currency] How do we report Coinbase Learning Reward

[bohueilin]

Dear Community,

I have learning rewards from Coinbase that i have not sold nor exchanged at all, they are still in my Coinbase Account and i do see them under the MISC income section.

Since i have not sold these Learning Rewards yet, does that mean i do NOT need to report them at all?

Thanks

[MinhT1 · Accepted solution]

Coinbase rewards are taxable income according to this Coinbase document.

You should report this income as Other Reportable Income.

In TurboTax, open your return and follow these steps:

1. Click on Federal in the left-hand column, then on Wages and Income
2. Continue and locate the Less Common Income section
3. Click Show more and click Start next to Miscellaneous Income at the bottom
4. On the next page, click Start next to Other Reportable Income.

[bohueilin]

Thank you so much @MinhT1 

Questions,

1.) if we use Turbotax Import, will those be automatically included? Or it is still required to enter manually ?

2.) What about stacking rewards (say ETH interest, etc)

Thanks

[MinhT1]

For rewards, you cannot import them. You have to enter them manually as I showed you.

Staking rewards are also taxable, and you enter them as previously shown. 

[bohueilin]

Thank you so much

[gemumalu]

In my opinion, I don't think you have to declare this type of earnings as "income", since they are not income as such, unless it is worth a lot of money, I do not see the need, but in the comments they told you yes and even how to do it So it's up to you which option to take.

[bohueilin]

thanks, yea i just want to do the things right 🙂

[DaveF1006]

Yes, this is taxable income as explained by MinhT1 above and it is not choice to make on whether or not to report it. 

@bohuellin

[bohueilin]

@DaveF1006  Thanks, yea for sure reporting, doing the things right 😜

[JamesG1]

@MinhT1 is correct.  The IRS has ruled that rewards 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 haven't been issued as U.S. dollars. 

Here is how to enter your staking rewards in TurboTax as other income:

• Down the left side of the screen, click Federal.
• Down the left side of the screen, click Wages & Income.
• Click Show more to the right of 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 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.

@bohueilin 

[lotusmonza]

I keep getting an error with the principal business code for my misc coinbase income of $1.15. Do I enter "Coinbase earnings" in A (principal business) and of so what is the principal business code?

[ErnieS0]

Delete your entries and report your Coinbase earnings as Other Income.
 

1. Click Federal in the left column
2. Click Wages & Income 
3. Scroll down to Less Common Income. Tap Show more
4. Select Miscellaneous Income, 1099-A, 1099-C
5. Select Other reportable income
6. Say Yes to Any Other Taxable Income?
7. Enter a description (Coinbase earnings) and amount ($1) 

@lotusmonza 

[lotusmonza]

Thanks!

[iceknight]

This is a useful suggestion. Thank you. I was looking for an answer for a hypothetical scenario like this myself. 

** Not tax advice, just sharing my thoughts on my own experience **

I also was thinking a bit more about it and realized that while I don't trade Crypto, I do other activities where I try to earn some income. This includes writing about stocks, investments and earning affiliate income. I spend money on specific expenses such as virtual office, phone plan (partial costs), domain and hosting costs, turbotax subscription, etc. I am thinking of documenting these and other expenses accurately and then filing a Schedule C (or other relevant forms as required) to record and claim my expenses, asset depreciation, etc. This way, even if there are these unspent rewards of 20/30 $ that are well under the $600 reporting threshold I can at least minimize the impact and also continue to do things right. This may work for me, others may have to customize the details as per your own case. Cheers

[slowkaveman]

I followed your directions but the income showed up on 1040 line 1h.

It still seems to be lumped into the AGI, I think I'm good?  Can someone confirm?