Do you need to file taxes if the only income for the year is less than $10 crypto income? (usually no if it's regular income bc less than threshold & didn't get a form from Coinbase for that either; i.e. bought some crypto, no sale, simple income). If yes, how to report/what forms to use.
If your only income for the year is below $12,950 then you are not required to file taxes. Unless it is self-employment income (which crypto sales are not but staking is).
Yes, that's the only income. I was only officially staking ETH (doesn't show anything for that year). These crypto just had rewards not staking, says Misc income/Rewards in Coinbase & all very small. Ex: ALGO, DAI rewards 0.01. But just noticed ATOM & XTZ says rewards/staking. All add up to less that $7.
If you only had $7 of income total - you don't have a filing requirement. See this chart to verify.
However, if you had a job or enough other income to require a tax return, you should include the disclosure statement with your tax return.
Although staking hasn't been specifically defined by the IRS, taxpayers should disclose their position on Form 8275 and keep documentation if the IRS questions the treatment the taxpayer has chosen.
Staking cryptocurrencies is a means for earning rewards for holding cryptocurrencies and providing a built-in investor and user base to give the coin value. Earning cryptocurrency through staking is similar to earning interest on a savings account. In exchange for staking your virtual currencies, you can be paid money that counts as taxable income.
You treat staking income the same as you do mining income: counted as fair market value at the time you earn the income and subject to income and possibly self-employment taxes.
So just to clarify - if the only income is staking income less than $7, then don't have a filing requirement/don't need to file anything correct? (and don't need to file form 8275, but keep documentation).