Topic: Miner tax help (Read 1114 times)
Even worse is the miners who don't cash out their mined coins and keep reinvesting them in more mining equipment. It would be pretty easy to not end up with much more then the original investment. If you went back and figured out tax for all the coins, you could end up pretty screwed.
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Bitcoin miners will have to report their earnings as taxable income with a value equal to the worth on the day it was mined. If they mine as part of a business, they would have to pay payroll taxes as well.
IRS assumes you have to pay taxes twice. First time it's income tax when you get rewarded with bitcoins from mining, and then capital gains tax when you sell it (if it gains at all).
What is controversial, if you mined 1 BTC when bitcoin price =$1000, you owes let's say $350 in tax. If you don't sell mined bitcoins immediately, and then it drops to $200 per bitcoin, you still owes $350 in income taxes and suffers losses
Of course you may deduct up to $3000 from capital loss, but it won't help if you mined 20 BTC ($7000 income tax minus $3000 allowed capital loss deduction)
Everyone would agree it's absolute idiocy.
Probably it's better to omit the fact of mining bitcoins and just report that you bought it for cash and then pay capital gain taxes. They don't have brain scanning machines yet, so it's pretty safe strategy
P.S. i'm not professional lawyer or accountant.
Okay, so I've been busy for a while and got away from watching whats going on and just now caught up, a little. Can someone help me understand my thinking of below and what I need to do here.
I've been mining for a few years, not a lot but I've always paid taxes based on the sales, never any capital gains. Do I need to go back to the beginning and calculate the capital gains on my earnings?
I also don't directly mine bitcoin anymore, I mine alt coins and switch between the calculated most profitable coin.
So my understanding is, I need to track each and every coin made and it's value and then calculate it's gain or loss at the time that I move it to USD. How in the world is this possible, going backwards and has anyone figured out an easy way to do this going forward? I am just as disgusted with this and every other burdensome business regulation out their as everyone else, but non-compliance at this point isn't an option, an audit is not something I'm interested in. Now given alt coin, I don't think it makes much a difference. My original thought was that I would have to track the value of each coin to track the gains, but thinking again, I guess each coin it either based on BTC or LTC so its value would be the same when it's sold for BTC or LTC. I guess a dollars worth of water is a dollars worth of beer, in the eyes of the IRS.
Another thought is, we're making something, so how is this any different than a company making digital software, which is inventory and not taxed until told?
I look forward to your thoughts... Oh I can feel the headache beginning.
I've been mining for a few years, not a lot but I've always paid taxes based on the sales, never any capital gains. Do I need to go back to the beginning and calculate the capital gains on my earnings?
I also don't directly mine bitcoin anymore, I mine alt coins and switch between the calculated most profitable coin.
So my understanding is, I need to track each and every coin made and it's value and then calculate it's gain or loss at the time that I move it to USD. How in the world is this possible, going backwards and has anyone figured out an easy way to do this going forward? I am just as disgusted with this and every other burdensome business regulation out their as everyone else, but non-compliance at this point isn't an option, an audit is not something I'm interested in. Now given alt coin, I don't think it makes much a difference. My original thought was that I would have to track the value of each coin to track the gains, but thinking again, I guess each coin it either based on BTC or LTC so its value would be the same when it's sold for BTC or LTC. I guess a dollars worth of water is a dollars worth of beer, in the eyes of the IRS.
Another thought is, we're making something, so how is this any different than a company making digital software, which is inventory and not taxed until told?
I look forward to your thoughts... Oh I can feel the headache beginning.
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