Topic: I'm glad I didn't buy any more video cards, a 1080ti barley makes $1 a day - page 4. (Read 3024 times)

I can't imagine why you guys trouble yourselves with taxation when you are mining shitcoins. Just record it when you cash out. There government will never even get proof that you did some mining once you send your coins to an exchange for cash out.

Do you have any sources for this kind of information? From everything that I have learned this is incorrect. I would not take what this user is saying as any kind of tax advice, because it doesn't seem to reference anything significant or be coming from an informed place. I've been wrong before, but I'm pretty sure that it is not considered income the moment it is mined. I think it becomes income once you exchange it for fiat, or goods with a referencable fiat value. Otherwise, it wouldn't make sense and they would be attempting to tax losses constantly. You can not be taxed for money you have not earned. If your business experiences a loss of 80% of it's earnings throughout the year, you are not expected to pay taxes on 100% of your earnings without considering the losses. Your taxable income is a product of gain/loss, from what I understand. You do not simply discredit your losses and tax yourself at the highest possible value. This isn't even what the IRS would suggest.

Regarding this:

"Yes, when a taxpayer successfully “mines” virtual currency, the fair market value of the virtual currency as of the date of receipt is includible in gross income."

I am assuming that since 0.1 or less coins can be transferred at a time and potentially several times each day, it would be allowable to summarize that X number of coins were mined in a month then one can take the average coin price for said month and use that logic for calculating income, coin value, etc..? I believe as long as it is consistent for all coins and months for the year that they would accept that?

Yep you did your taxes wrong, You need to re-file, The Irs does have clear definition on how crypto mining is taxed.  I suggest you hire an accountant and pay them some big bucks to fix your mess up.  Its considered income on the day its mined and addition taxed as capital gains  if you sell it.

As mentioned by got-miner and also a publication from the irs on guidelines
https://www.irs.gov/pub/irs-drop/n-14-21.pdf

"Q-8: Does a taxpayer who “mines” virtual currency (for example, uses computer
resources to validate Bitcoin transactions and maintain the public Bitcoin
transaction ledger) realize gross income upon receipt of the virtual currency
resulting from those activities?
A-8: Yes, when a taxpayer successfully “mines” virtual currency, the fair market value
of the virtual currency as of the date of receipt is includible in gross income. See
Publication 525, Taxable and Nontaxable Income, for more information on taxable
income.
Q-9: Is an individual who “mines” virtual currency as a trade or business subject
to self-employment tax on the income derived from those activities?
A-9: If a taxpayer’s “mining” of virtual currency constitutes a trade or business, and the
“mining” activity is not undertaken by the taxpayer as an employee, the net earnings
from self-employment (generally, gross income derived from carrying on a trade or
business less allowable deductions) resulting from those activities constitute selfemployment
income and are subject to the self-employment tax. See Chapter 10 of
Publication 334, Tax Guide for Small Business, for more information on selfemployment
tax and Publication 535, Business Expenses, for more information on
determining whether expenses are from a business activity carried on to make a profit. "

You should be paying self employment tax on mined coins in the US.  It's a 1040 Schedule C.  This is where you "should" be paying taxes based on the coin price on the day it was mined.  This is also where you deduct your hardware costs, electricity, ect.

Capital gains tax is only paid on the gain.  If you mined it and it was worth $1.  You create a taxable event by selling it for $5.  You pay capital gains tax on the gain, which is $4.  Trading it for other crypto is also a taxable event, which makes it even more complicated.

Whether or not something gets done this year about the first part of this ... Who knows.  Hopefully, because it does suck for a lot of people right now.

Assuming you are still holding the coins, its just capital gains tax on the mined coins at the price when they were mined? Also assuming you bought hardware in the last quarter, mined coins when the price was high and now its low, can you claim electricity and hardware depreciation on the capital gains then and potentially not owe anything?

Ok FUDlord. I filed my taxes last week and paid my taxes on mining profits minus electricity costs and hardware. The IRS does not currently have much in the way of defining how crypto is to be taxed yet. So pay capital gains on your profits and it is done.

Mining is still profitable unless you are like lunobird who either is terrible at it or missed the bus on it and is just salty. Probably just trying to deter noobs to keep difficulty low.

You're welcome.

To the IRS your a criminal for mining if you don't report your earnings accurately or your hiding your mined coins,  According to them you will be faced with a 250k fine and be sent to prison for 5 years for not reporting or hiding your mined earnings of a buck a day for your 1080 ti.  LOL

Seriously hire an accountant, its not worth testing the irs,  They can audit your 5 years later for your past history.

https://www.irs.gov/newsroom/irs-reminds-taxpayers-to-report-virtual-currency-transactions

"taxpayers could be subject to criminal prosecution for failing to properly report the income tax consequences of virtual currency transactions. Criminal charges could include tax evasion and filing a false tax return. Anyone convicted of tax evasion is subject to a prison term of up to five years and a fine of up to $250,000. Anyone convicted of filing a false return is subject to a prison term of up to three years and a fine of up to $250,000."

happy mining folks, Enjoy your pathetic profits or losses and risking on catching your house on fire and be sent to prison.

Thanks for proving my point. Mining can very much be a financial loss and a waste of time.  No miner cashes out usd daily on the coins they mine,  very rare.  I have thought about this months ago and made sure I cashed out enough coin investments I bought to cover taxes,  But for those that starting mining recently last quarter got rekt on prices by mining the top and owing taxes on it and will have to take a loss and hire an accountant to fix their mess up.

I wish the IRS the best of luck trying to enforce that...

It's your choice whether or not you want to cash out enough to pay taxes on it daily or hold it all hoping it will increase in value.  If you don't have the extra funds to front the money for the taxes, maybe you should have thought of that months ago.

The IRS takes a percentage everyday you mine it . Most mined coins at the top last quarter and didn't cash out. That means if you mined any altcoins last quarter and held it you got rekt.

For example you mined emc2 at $2 bucks last quarter irs counts that as income right away the day it's mined. However emc2 is now .20 cents And your screwed.  People have to pay taxes in a couple of weeks and the coins they mined last quarter are all at a current loss. It was best not to mine in the first place.

Plus you will need to spend money to hire an accountant to figure out your mining and tax mess just to make .80 cents a day for 1080 ti.  Still worth it?! Mining has always been for losers

Slim to none doesn't even make sense.  They IRS takes a percentage, not a fixed dollar amount.

The only benefit I see with a mining rig is to be able to mine coins on credit card. Buying coins on credit card is insane now that visa MasterCard charging it as a cash advance. Plus coinbase had their own fees and we are still in a fall bear trend and have not reached winter accumulating season yet. Times will be slower for most of this year.

Buying a mining rig protects your capital investment from further coin price declines and as long as your breaking even with electricity cost your still paying cheaper than buying on coinbase.

Mining is an arms race fighting for left over pocket change someone dropped in the couch.  Profits are very slim to none after IRS gets their cut.

often correctly chosen coin and hodl, give very fast payback, at the moment I receive more than I spend, therefore everything is fine.

Mining always was a long term investment. Well I was glad when one of my rigs purchased in May ROI'd in 3.5 months but I considered it as a nice bonus for my hard research work done. Other than that I don't even keep calculations of what was spent and what was earned. And I never bought hardware with cash out of my pocket, always for crypto (or crypto converted to fiat).

He's not the only one who expected to break even within a few months. Lots of people actually went running and purchased rigs like crazy, spending even thousand's to build a top notch mining rig.  Profitability has dramatically decreased after the summer, anyone who went and purchased a rig within the last semester is definitely on the verge of screwing over.

Seriously, if you thought you would get an ROI in like 2-3 months, you came at the wrong time. If you are not happy with the payouts, just sell the graphic card or stop using nicehash...

The mining game is not short term my friend, just keep mining and hodl the coins. The trend will change, but no one knows when. Its a perfect time to start picking up used hardware now. The prices are starting to fall on the second hand market.