Where should I input crypto staking rewards if I was not issued a 1099-MISC (from Crypto.com) because the rewards altogether did not exceed $600?

[rile263430]

The 1099-MISC screen/option will not let me move forward unless I was actually issued said form. Thank you so much

[ErnieS0]

Staking rewards may not be taxable if you held your coins. You can report or not report this. It is a grey area.

In Jarrett et al vs United States of America, a Tennessee couple sued the IRS to get a refund for tax paid on staking income that they received but still held in their account.

The Justice Department offered to refund the money. But the IRS refused to say whether it would pursue other taxpayers who did not report staking rewards on their income tax return.

If you want to report staking rewards, you can report as Other Reportable Income even if you did not receive a Form 1099-MISC.

• In TurboTax Online click on Federal on the left column
• Click on Wages & Income at the top
• Scroll down to Miscellaneous Income, 1099-A, 1099-C. Start
• Choose Other reportable income
• Say Yes to Any Other Taxable Income?
• In Other Taxable Income, enter a Description and Amount

[rile263430]

Ernie, thank you so much for your response and help!

I have tried to manually input these reward amounts in the "Miscellaneous Income, 1099-A, 1099-C" section, but for those less than 50 cents (< $0.50) it rounds down to $0.00 and thus nothing is recorded.

Should I instead just add them all up and input them on one line as one reward? Thanks again

[ColeenD3]

No, If you have multiple 1099s, you should enter each one. Omit any form that would round down to zero.

[topjimmy1]

@ColeenD3, as she stated in her original post, she was not issued 1099's for these. 

[ColeenD3]

She asked about rounding. That advice still applies. Round up or down. 

@topjimmy1

[topjimmy1]

@ColeenD3, yes that makes sense. I am still curious though, is it acceptable to add up all of the staking income that is not included in a 1099-MISC form, and input the total as one number? In the Other Income section.

[ColeenD3]

I get your point. In the absence of a reporting form that the IRS has to match to your return, you can add the amounts together.

@topjimmy1

[wilfsdad1965]

My personal opinion is that staking rewards should not be reported if you hold the coin in a wallet, because the reward is in the form of a crypto coin. A gain is not realized until the coin is sold/exchanged, therefore a staking reward is like buying crypto with a zero cost basis, it's not like interest on a savings account.

The only time you should be taxed is when you sell or exchange the crypto, not when you receive a staking reward, otherwise you are being taxed twice on the same thing.

However, this means you need to keep a track of your staking rewards (amount/date/coin type/value on  that date) for future sales/exchanges, as a coin you buy will have a cost basis you can substract, but staking rewards won't.
If you buy 1 coin, and get 0.5 of a coin as a staking reward, when you sell 1.5 coins, 1.0 will have a positive cost basis (the price you bought it at), 0.5 will have a zero cost basis.

[narayananvm]

Regarding your personal opinion to not report staking rewards, can you please clarify how it will be taxed on selling/converting the coins in a future date?

1. I received 200 XYZ coins as staking rewards in my wallet on 1/1/20 at a FMV of $1. I chose not to report this event in FY20 tax returns filing.

2. I sold 100 XYZ coins on 10/1/20 for $2.

3. I sold the other half of 100 XYZ coins on 2/1/21 for $3.

Should #2 taxable event be reported as short term capital gains and #3 as long term capital gains OR both of them should be treated as short term capital gains?

[JohnB5677]

To be clear.  Staking awards are taxable. Staking will generate passive income. This is like getting interest in a
checking account, and this is how to account for it:
 

1. With your return open, go to
2. Federal
3. Wages & Income
4. Less Common Income
5. next to Miscellaneous Income, 1099-A, 1099-C
6. Select Other Reportable Income
7. Answer Yes on Any Other Taxable Income? Screen
8. Continue through the interview

The value at which you received it will become your basis for future transactions

@narayananvm

As stated here you should have included it on your 2020 tax return.  The correct way to do this would be to file an amended 2020 tax return with that income included.  But that would generate a very small amount of tax (under $45).  So the IRS won't get too upset about that.

You should report it this year, but you should use a basis of "0" because you didn't report it last year.

Yes, the second transaction at $3 would be long-term.

[topjimmy1]

@JohnB5677, the reason that some people are considering not reporting their staking rewards at time of receipt is due to a recent court case. I'm not going to get into it here, but look up Jarrett vs. IRS (not exact case name but that will bring up the links).  Sure does sound like the IRS is agreeing that the staking rewards should not be taxed at time of receipt but rather at time of sale.  However, the case results so far have been inconclusive as there is no specific guidance from the IRS. Yet. 

My suggestion is report the staking income as income upon receipt as JohnB5677 says. But be ready to file an amended 2021 to get it back depending on how this shakes out.

The benefit of paying the tax at time of sale, is you could have a long term gain and pay the lower rate. 

Lastly, to repeat everyone above, if you report it as staking income at receipt, use receipt value as cost basis for future sales. If you wait and report the gain when you sell it, use zero dollars as cost basis.

[narayananvm]

@JohnB5677 Thank you for the clear explanation! One last question: There are also some Staking rewards that I received from centralized exchanges such as FTX.US, Coinbase who have given me a 1099-MISC document with the total dollar amount of the staking rewards. Should I report this using "Other Common Income —> 1099-MISC" or should I also report these as you have suggested i.e. "Less Common Income -> Miscellaneous Income, 1099-A, 1099-C -> Other Reportable Income"

[JohnB5677]

You should use the latter.

1. With your return open, go to
2. Federal
3. Wages & Income
4. Less Common Income
5. next to Miscellaneous Income, 1099-A, 1099-C
6. Select Other Reportable Income
7. Answer Yes on Any Other Taxable Income? Screen
8. Continue through the interview

The first method would generate a 15.3% self-employment tax.

[lnk-fr]

Wouldn't the IRS come after you since 1099-misc's are reported by the issuer directly to the IRS and they already know to expect this amount to be reported. By filing is another way that isn't a 1099-misc like you suggested, the IRS's automated system immediately knows that this person under reported their income. I'm not saying it's right for the IRS to take self employment tax on this income, but wouldn't it create issues and technically an inaccurate return from their perspective? Could it lead to them charging back taxes on the unpaid portion and audits?  @JohnB5677