Have a Crypto question on free crypto provided by Coinbase. Do I need to report Coinbase Earn and Coinbase Rewards Income if total amount is less than $50?

[Opus 17]

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.

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. 

[robinsjt]

@Opus 17 

Thanks for the detailed answer and appreciate the example to put it in context. I am still holding and haven't sold any of it, but do understand process now.

Cheers,

Johnathan

[Jake129]

Is this true for the upcoming tax year as well?

[Opus 17]

The law hasn’t changed.