The method for reporting mined cryptocurrency depends on if you are classified as a hobbyist or self-employed (business) miner under the IRS. Some measures to determine which group you are in include:
- Whether you expect to make a future profit from the appreciation of the assets
- Whether the activity makes a profit and how much profit it makes
- If you will change your method of operation to improve profitability
- If you depend on the income for livelihood
A more complete list of guidelines can be found here.
Hobbyists report income on line 21 (other income) of the Form 1040 Schedule 1. Expenses directly related to the mining will be reported on a Schedule A form. Self-employed business miners report income and expenses on a Schedule C form, and income is subject to a 15.3% self-employment tax.
Note: Lumina is intended to serve as an informational and assistive tool only. Lumina is not intended to substitute for professional tax, accounting, audit, or legal advice. Information provided on Lumina is subject to change without notice. Lumina is not responsible for the accuracy of your tax, audit, or legal compliance. Please consult a licensed professional for financial, tax, and legal advice.
