Topic: Taxes Mining Bitcoins (Read 8481 times)

Great advice!  Why don't we all just disobey the law because we don't want to do something.  Fucking idiot.  Pay your taxes people, its not hard and will save you time and money in the future when you don't owe interest and penalties and possibly jail time.

Um, after the cost of the hardware itself, the electricity, and the time of having to do it, to get a very small trickle of coin I'm not reporting that on a tax form. The whole point is this is a decentralized currency that the government and IRS has no place in regulating. Don't report. Let them prove you owe something and fight for it.

In the UK if you are mining bitcoins then HMRC regards this as a trade and will charge any profits to income tax and national insurance, so presume similar will apply. They are starting to clamp down too.

Currently, Canadian regulatory authorities posit that digital currency—such as bitcoin and other cryptocurrencies—does not constitute either money or currency. In 2014, the Bank of Canada released a position paper concluding that bitcoin and other cryptocurrencies fail to meet the definition of money. In 2013, an interpretation letter released by the Canada Revenue Agency stated that bitcoin and other digital currencies were not currency for Canadian tax purposes. Instead, the Canada Revenue Agency concluded that a bitcoin was a commodity, like gold or oil. So, the tax rules concerning barter arrangements apply to bitcoin transactions. As mentioned, the Canada Revenue Agency treats bitcoin—and digital currencies generally—as a commodity for income-tax purposes. As a result, bitcoin transactions are subject to the same rules as barter transactions—that is, transactions where one commodity is exchanged for another.

Generally, this means that a gain or loss from a bitcoin transaction will be treated as either (i) income or loss from business or property or (ii) a capital gain or loss. The difference comes with important tax implications. The full amount of business or property income is taxable, while only one-half of a capital gain is taxable. On the flip side, while only one-half of capital losses are deductible, one may fully deduct losses associated with business or investment activity.

According to the IRS, when a taxpayer successfully “mines” Bitcoins and has earnings from that activity whether in the form of Bitcoins or any other form, he or she must include it in his gross income after determining the fair market dollar value of the virtual currency as of the day he received it. If a bitcoin miner is self-employed, his or her gross earnings minus allowable tax deductions are also subject to the self-employment tax.

Could you explain this? What should I do when I buy a meal in a restaurant for Bitcoin? Should I take the check to the tax office and pay the tax?
I would expect the authorities to demand people pay taxes from Bitcoins they're holding ahd report the gains every year. This way if they decide to spend their coins there won't be any misunderstandings. If you weren't asked to pay taxes every year you could later buy a large number of cheap products like beer cans and hide the purchase never having to report the transaction.

First most of government and politicians do not know about bitcoin and it's technology. Every bitcoin related earnings will be considered as service oriented earning only. And most of the government gives a 15 percent taxation on the bitcoin earning when you want to exchange it as a fiat currency.
If you cross the earning tax payers limit means we have to pay tax for all the earnings you are making from bitcoin or other crypto earnings.

I don't think there are any tax laws on bitcoin mining. However, in the United States, the tax law only applies when you buy, sell or spend bitcoin on a tangible commodity.

At least in Europe your house doesn't get raided and your computer confiscated if you don't. Sure you have to pay taxes and a stupid VAT, but I'd rather live here than in the US where the authorities can steal your stuff and put you in jail with murderers and rapists for selling Bitcoins.


Mining isn't taxed but income from it is. You don't have to report mining, unless you have a mining business and keeping books, but if you exchange the coins and get fiat you are supposed to pay income tax.

As far as I know, the mining is not taxed or something has changed. When you deduce that it is possible and that a rarity. What taxes do you mean, in my country all this is free.

It totally balls down on the location just as you have said. I have been mining for a while and apart from the tax I had to pay alongside the hardware, the electricity bill I pay, there has been no form of tax. The only way I guess I may have to end up paying tax is if my government decides to start taxing when converting to fiat while making use of the exchanges.

Well, those are capital gains and unless you report it, mostly by converting into fiat with the use of an exchange, then this is where tax comes in. Even without mining in some places and you just buy BTC, it is known that you will end up having some gains on it which means it is subject to tax. So, if you decide to mine, pay your electricity bills and leave your funds in your wallet, then tax obviously does not apply.

I don’t typically post on here, but this topic has garnered far too many ‘opinions’ instead of facts. To the OP: see the following for taxation of currency mining in the US.

Also, as mentioned by others, nearly every reputable pool will offer a downloadable spreadsheet of your data for tax and audit purposes. If they don’t - good luck.

Keep tabs on every purchase and use it as a write-off, from monthly rents to power cords. Larger items, such as your ASICs, may have to be depreciated over time (and you may want to in order to reduce future tax burdens). Typically these are on a 5 year straight line depreciation, or you can choose to do a Section 179 deduction and write off the full amount in year 1. See your CPA for all tax questions and what is best for you.

IRS Notice 2014-21, Q-9

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 self-employment income and are subject to the self-employment tax.  See Chapter 10 of Publication 334, Tax Guide for Small Business, for more information on self-employment tax and Publication 535, Business Expenses, for more information on determining whether expenses are from a business activity carried on to make a profit.

Bzzt -- wrong.
If your state requires you to pay sales tax on items purchased by phone/mail/online and the retailer does not collect and process the tax then YES we are supposed to report the purchase and pay the tax when ya file yearly state/fed taxes.

Catch is the state finding out. If your purchase requires no customs duty to be paid (under $2500), no problem. Pay duty (FedEx/UPS/DHL will let you know when/how much it is) and CBP reports the purchase to the state where miner is shipped. 3x times in the past Michigan sent me Tax-due discovery letters for miner purchases the previous year that went over the duty-free limit. In each case including late-fee totaled around $190 due.

From a business standpoint Customs duty and any taxes paid to get a miner are simple business deductions so becomes a moot point. For tax purposes what matters is the value of the equipment in USD at time of purchase.

it seems if we do hardware import with bitcoin payment system. this will not be taxed. because basically we do not transactions through transactions involving taxation ,, we will only pay the shipping cost of goods without the need to think about paying the state tax.

Without question the best thing to do is to go to a tax attorney, follow his recommendation and use him to file your taxes. He has a relationship with the IRS (assuming the US here) and while the IRS may ask for additional monies you may very well not be hit with fees and interest. 

The above is speculative because there isn't an objective legal history regarding crypto.  You would have shown good intention and follow through by hiring an attorney and following the guidelines, and if your books are clear and above board then you have covered yourself as best as possible.

And that is how it should really be which I still expect that is how it is going to keep being in the long run.
There is no way you are not going to at least at some point convert to fiat or make use of it to purchase some property and this is where the tax comes in.

Anything outside that is obviously not going to be taxable not like it is going to be easy monitoring every wallet to tax each and everyone in the first place.

None of government will comes into the bitcoin and try regulize it until you are making conversation of bitcoin into Fiat cash via using banking.
In that time auto you have to show the source of income to have the current account in your bank. So automatically you will show the tax files up. Please keep check in your country whether they have the taxes on bitcoin or not.

Even if government would decide to impose taxes on miners they wont really have an idea on how much % they would ask and they wont really know for sure since its not still converted to fiat which means I do agree that it would still need to be converted first before it would really need to pay up the obligations. Mining operation specially do have large scale ones do really have serious profits which government would really keep an eye on it.

Transcation charges only for convert bitcoin into FIAT  it's a digital currency system only for online transaction So direct taxes not applicable.You no need to pay tax for the bitcoin you have with you.You can use bitcoin as a tax free one.

Yeah, so far, that is the only way and which is absolutely normal. As long as you keep making use of fiat and you are making profit on whatever you are doing even if it is by keeping your funds in your wallet, then tax is compulsory. Although, this differs in so many places but with the governments regulating the exchanges now, this is something that cannot be discarded. Anything asides conversion to fiat is not even possible.