Crypto Staking Income

Enter staking rewards in TurboTax as other income.

 

Follow these steps to enter in TurboTax Online:

 

• Down the left side of the screen, click Federal.
• Down the left side of the screen, click Wages & Income.
• Click the down arrow to the right of Other Common Income.
• Click to the right of Form 1099-MISC.
• At the screen Let's enter the income, enter the information from the form.
• At the screen Describe the reason, enter 'staking rewards'.  Click Continue.
• At the screen Do one of these uncommon situations apply, select None of these apply.  Click Continue.
• At the screen Did the staking rewards involve work that's like your main job?, select No.  Click Continue.
• At the screen How often did you get income for staking rewards?, select the answer.  Click Continue.
• At the screen Did the staking rewards involve an intent to earn money?, select No.  Click Continue.

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.

The IRS has ruled that staking rewards only become taxable once the taxpayer "acquires the ability to transfer, sell, exchange, or otherwise dispose of the cryptocurrency."  You will need to convert your rewards to US dollars if they have not been issued in U.S. dollars.

The question Did the staking rewards involve an intent to earn money? does not come up when I go through the prompts and it automatically assumes taxes on the staking rewards. Is there a workaround or another place to select this?

Are you using TurboTax Online or Desktop?

 

Are you reporting the information from an IRS form 1099-MISC?  Or something else?  

 

If the reporting is an IRS form 1099-MISC, at the screen Do one of these uncommon situations apply, did you select None of these apply?

 

 

"and it automatically assumes taxes on the staking rewards."

 

If the transaction is reported on an IRS form 1099-MISC, it likely is a taxable transaction.  Or are you referring to self-employment income?  Please clarify.

 

@elwalker20 

 

I am having a similar problem. Coinbase sent a 1099-MISC for my staking income, and after answering all the questions as you recommend, it says it will report it on Schedule C, which according to IRS publications, is wrong unless I'm actually doing it as a trade or business.

On the Income Topics page, scroll down to Less Common Income > Miscellaneous Income 1099A, 1099C and choose Start/Update. 

 

On the next page, scroll down to Digital Assets Not Reported Elsewhere.  

 

On the next page, enter the amount from your 1099-Misc from Coinbase. 

 

The income will be reported on Schedule 1, Line 8v,  and be included on Form 1040, Line 8.

 

@KevinP1