Taxes are a part of life if you live in the United States. If you earn cryptocurrency by mining/staking or receive it as a promotion or as payment for services rendered, you must upload it and tag it as income or mining in your tax software.
You owe tax on the entire value of the cryptocurrency on the day you received it, at your regular income tax rate. You will also pays capital gains taxes when you sell it. I use Koinly to track taxes on income and cost basis for capital gains.
Koinly is super easy to use. Once you login, you can connect all of your exchanges via API or CSV upload.
Click Add Wallet/Exchange and connect the appropriate exchanges.
In this example, I am going to create a Wallet and call it Nervos CKB Mining (see below)
I am Mining Nervos CKB with two small CK-Boxes. You can see my tutorial series below:
I am using Poolin as my mining pool. I have my mining pool configured to ship to my wallet every time I earn 1000 CKB. Let’s walk through how to tag a mining reward as a transaction for taxing purposes.
As you can see above, every time the 1000 CKB threshhold occurs, I am automatically paid to my wallet. You can configure this setting as shown below:
For accurate tax purposes, you can export all of your mining rewards at the end of the year and upload to tax software or you can simply, manually enter. Let’s walk through it.
Click Transactions in Koinly as shown below:
Click Add Transaction | Deposit.
Tap on the details of a mining reward in Poolin to get the date of the transaction and amount. For Example, my latest mining reward was 230.2291 CKB. The Transaction is as follow:
Amount - 230.2291 CKB
Date - 12-09-2021 21:56
Now Enter the information as shown below:
Click Save and Koinly adds the transaction to your wallet (shown below).
Now you need to tag the transaction as mining.
Now repeat this process for all transactions you mine. Next, you can click Tax Reports when you are done and see the transactions are tagged as income w/ the appropriate conversion of the coin based on the date entered.
At the end of the year, you can download the appropriate forms for taxes.
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Happy Tracking.
Great tutorial thank you! Will you be creating one to track Yokai transactions in Koinly?