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gells
Level 1

How do you report crypto currency staking rewards? I earned staking rewards from my Algorand Wallet and believe I need to manually enter them.

 
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Accepted Solutions
ColeenD3
Expert Alumni

How do you report crypto currency staking rewards? I earned staking rewards from my Algorand Wallet and believe I need to manually enter them.

Cryptocurrency airdrops are (usually) free distributions of coins or tokens into multiple wallet addresses to promote and drive adoption of a new virtual currency.

Recently, the IRS ruled that airdrops, along with promos and staking rewards, only become taxable once the taxpayer "acquires the ability to transfer, sell, exchange, or otherwise dispose of the cryptocurrency." Airdropped currency that's not yet usable or accessible would therefore not be taxable until the taxpayer can exercise control over it.

 

Step 1 - Convert to USD

 

Step 2 - Enter in TurboTax

 

Staking Award

 

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3 Replies
ColeenD3
Expert Alumni

How do you report crypto currency staking rewards? I earned staking rewards from my Algorand Wallet and believe I need to manually enter them.

Cryptocurrency airdrops are (usually) free distributions of coins or tokens into multiple wallet addresses to promote and drive adoption of a new virtual currency.

Recently, the IRS ruled that airdrops, along with promos and staking rewards, only become taxable once the taxpayer "acquires the ability to transfer, sell, exchange, or otherwise dispose of the cryptocurrency." Airdropped currency that's not yet usable or accessible would therefore not be taxable until the taxpayer can exercise control over it.

 

Step 1 - Convert to USD

 

Step 2 - Enter in TurboTax

 

Staking Award

 

null628
Level 1

How do you report crypto currency staking rewards? I earned staking rewards from my Algorand Wallet and believe I need to manually enter them.

First off, do NOT listen to the "EXPERT" ColeenD3. She clearly does not understand nor care to understand crypto. The question clearly stated, how do I report my staking rewards. Staking is NOT an airdrop.

 

Algorand, Cardano, Polkadot and other Proof-of-Stake (POS) coins provide actual rewards which can be exercised immediately upon receipt. The IRS considers staking rewards as income and taxed at the market value they were received.

 

So, if you kept your staking rewards you must still report that as income and pay income tax on it. If you sold it, you may have a short-term gain or loss that would impact your final tax total. Assuming you sold it immediately you almost certainly will have the income and short-term gain or loss since the price likely change from the minute you received the staking reward and the time you actually got around to selling it or traded it for something else.  This situation will require crypto analysis tax software to resolve and enter correctly.

 

Please, ColeenD3 buy some Cardano and stake it so you can understand what you are talking about. Also, please refrain from answering questions you don't actually understand. Crypto is not a space for guessing, you are going to get a lot of people in trouble with the IRS making statements like comparing Staking Rewards with Airdrops, my goodness...

JulieS
Expert Alumni

How do you report crypto currency staking rewards? I earned staking rewards from my Algorand Wallet and believe I need to manually enter them.

The fact of the matter is that the IRS has not provided guidance on how income from crypto staking should be taxed or reported.

 

Notice 2014-21 is where we get most of our current information about reporting crypto transactions, mining and other income. It doesn't mention staking even once. 

 

The IRS has made just a few points clear:

  • Crypto is not currency.
  • Crypto is property. 
  • Most crypto transactions result in reportable income.
  • The crypto you receive is taxable income and where you report it on your tax return depends on how you received it.

In this atmosphere of uncertainty, the conservative approach is report your staking rewards as "Other taxable income" in the year that you receive them. 

 

If you want to report your staking income as Other taxable income:

  1. Select Federal on the left side menu.
  2. Select Income and Expenses toward upper left.
  3. Expand/ scroll down the list and find the section called, Less Common Income.
  4. Scroll all the way down and select Miscellaneous Income, 1099-A, 1099-C.
  5. Select Other reportable income at the very bottom.
  6. Answer Yes and click Continue.
  7. Enter a description and amount on this page, click Continue.

Click here to learn more about this topic.

 

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