Crypto Yearly interest income reporting

[DianeW777]

Yes, you are correct in thinking the tax law will become more clear each year as it pertains to crypto transactions. They do not refer to staking as interest income currently.  The reporting can be done exactly as instructed by our Tax Expert @JamesG1.

In tax law the meaning behind the following statements is whether you performed a service to earn this money.  You physically, not your money earning money for you.  The difference is 'earned income' and 'unearned income' which are treated very differently on the tax return and under tax law.

1. Did Crypto Staking involve work like your main job? 
2. Did the Crypto Staking involve an intent to earn money?

The IRS defines earned income as:

• Taxable income you earned as an employee, such as wages, salaries, commissions, and tips
• Profits from operating your business or farm
• Long-term disability pay, if received before the minimum retirement age
• Union strike benefits

The IRS also gives you the option of treating nontaxable combat pay (code Q in box 12 of your W-2) as earned income for the Earned Income Credit (EIC).

The IRS defines unearned income as:

• Taxable income from investment-type income such as taxable interest, ordinary dividends, and capital gain distributions. 
• It also includes unemployment compensation, taxable social security benefits, pensions, annuities, cancellation of debt, and distributions of unearned income from a trust

Please update here if you have more questions and we can help.

@fjleontax 

[fjleontax]

TurboTax says DO NOT ENTER 1099 MISC INCOME HERE on the miscellaneous income section

I used the 1099 misc section instead which uses box 3 answered without intent and that got show up on 1040 with schedule 1 in item 8z which i believe it's the best fit for now

[KrisD15]

Yes, as you say, the IRS will most probably issue more guidance in the near future. 

The main objective is to get that reported as income, but not as Self-Employment so that there is no Self-Employment tax charged.    

[jeloian]

"Did the Crypto Staking involve an intent to earn money?"

This option does not appear in Turbotax Online 2022... As a result, i cannot avoid self-employment tax.

What do i select when entering my info from my 1099-MISC (issued by Gemini for my Gemini Earn Interest)?

[DoninGA]

@jeloian 

To report the Form 1099-MISC as ordinary income -

Click on Federal on the left side of the online program screen

Click on Wages & Income

Scroll down to Other Common Income

On Form 1099-MISC, click on the start or revisit button

On the following screen answer Yes for receiving a Form 1099-MISC

Complete the Form 1099-MISC and Continue

On the next screen enter the reason for receiving the form and Continue

On the next screen Does one of these uncommon situations apply?

Check the box labeled None of these apply and Continue

On the following screen select No, it did not involve work like (your name) main job and Continue

On the following screen select got it in 2022 and Continue

On the following screen select No, it didn't involve an intent to earn money and Continue

On the following screen select No you do not have another 1099-MISC and Continue

On the following screen select Done

[jeloian]

Got it!
I had selected "got it in 2021 and 2022" which screwed it up.
Thank you,