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posted Feb 3, 2022 7:46:57 AM

Mining cryptocurrency. Added it as an investment under "Investment Income". How do I add expenses for equipment purchased to mine?

I think I should go to "Self-Employment" and add mining as a business.  But I already added the income as "Investment Income".  Do I *only* add the equipment expenses under the business, or do I need to add the income again?

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1 Best answer
Expert Alumni
Feb 3, 2022 9:45:17 AM

There are two things at hand here:

  • Crypto mining is taxed as regular income, not investment income.
  • Crypto mining can be either a hobby or a business. 
    • This is determined by your dependence on mining for income, and your mining profitability.
    • If you're running a crypto mining business, you may owe self-employment taxes if your income exceeded your expenses for the year.
    • Mining Businesses are allowed to write off mining-related expenses and record depreciation.
    • A miner can classify themselves as a trade or business through a limited liability company (LLC) or as a sole proprietor.

 

2 Replies
Expert Alumni
Feb 3, 2022 9:45:17 AM

There are two things at hand here:

  • Crypto mining is taxed as regular income, not investment income.
  • Crypto mining can be either a hobby or a business. 
    • This is determined by your dependence on mining for income, and your mining profitability.
    • If you're running a crypto mining business, you may owe self-employment taxes if your income exceeded your expenses for the year.
    • Mining Businesses are allowed to write off mining-related expenses and record depreciation.
    • A miner can classify themselves as a trade or business through a limited liability company (LLC) or as a sole proprietor.

 

New Member
Feb 13, 2025 1:34:49 PM

Could you answer be anymore vague? I'm disabled and retired. None of this crypto mining is for current income, I'm buying equipment and mining for long term holding. None of this is being cashed out for 10-20+ years. All, I need to know is where to deduct the equipment that I'm buying. And, Turbo Tax makes it so complicated.