Bitcoin Forum

Im still trying to figure out how taxes work in regard to mining. My thought and understanding at this point is that its treated like any other income - like a business and taxes as such. Once this is fully enforced how will it effect mining operations? Id think bigger mining DCs will have a hard time due to the thin layer of profit to begin with. They have to convert BTC to fiat to cover costs where a home miner doesnt so much. A home miner can 'hide' by never converting to fiat and leaving no paper trail.

Thoughts?

Can anyone link me to more info on taxes related to mining?

Since taxes are only on the 'profit" from operating a business, this is not a disadvantage.
Big mining DCs will be able to claim all tax shields, including depreciation.

it depend on when you live, are you talking about USA jurisdiction? common sense tell me that only those with a big farm will pay anything for their income

if you have a very small business, let's say 3 rig.. there is a high chance that will not need to pay anything, as usual a certain amount must be surpassed per year, this is true in some european country

but maybe in usa you need to pay on any amount...wich would be stupid anyway, because otherwise any random joe need to pay a taxes if he is running his gaming pc to mine...

In US you have to pay tax on the bitcoin mined. See discussions in the other thread:
https://bitcointalk.org/index.php?topic=1579981.msg17495312#msg17495312 (https://bitcointalk.org/index.php?topic=1579981.msg17495312#msg17495312)

my understanding is that mined bitcoin is like granted stock vested, you have to pay tax at that time.

greetings all,,, i want to ask if there are regulations about bitcoin tax and what percentage taxes we pay from bitcoin ownership we have ?
and about the same as well bitcoin mining me inquire about the percentage of  taxes we pay from our mining results,,,,?
please explanation for this is very useful for me which is a cloud about bitcoin?
thank you all,,

again it depend on where do yu live, because in soem country bitcoin is simply not regulated you can go ahead and don't pay anything

but for bit amunt converted in fait the rule remain the same you need to declare eventually, surely no government would allow a great amount of cash to avoid taxes no matter what is the source of the income

why do you think "how taxes work in regard to mining" ?  Bitcoin shouldn't has tax, the tax will limit the growth of this currency
But the most important thing is not a place, where can control Bitcoin completely
Let's make every effort possible to control and put a tax on Bitcoin but I think that you can not do it

As a note for those filing taxes in the US on mining income.

For one, you should treat this income as business income. By doing so, you can deduct the cost of your equipment using:

Section 1.263(a)-1(f)
Safe Harbor De Minimis Election

This allows you to deduct the cost of your mining equipment as a one-off deduction, taking the full value of the deduction instead of worrying about depreciation tables and such. This was actually suggested to me by TurboTax since none of the miners I bought this past year cost more than $2400 each.

Has anyone else used this election?

I’ve already filed and had my return approved/dispensed.

There is a new thing I observed in a crypto you tube video the other day where there is a section for cryptocurrency to report where you had exchanged into fiat.
This might be the section where you would report the income acquired from mining.

For bigger mining operators they would surely get some attention if huge cash will be credited into their bank accounts after exchanging their mined crypto into fiat cash.
Even on a country which doesn't regulate crypto would really have questions on where those cash came from.If you declare such mining activity then expect for it to be taxed without exemption
since they do know you are generating some serious profits here but for home miners then it is just okay for you not to declare since these are only small time profits.

If you're in the US it would not be very smart to not report your mining income. Lets say BTC goes on another bull run and you decide to cash out a tidy sum of USD, your exchange will likely report that transaction eventually. How will you explain to the IRS why you didn't report that sale of BTC? If you do report the sale, how will you explain the source of the BTC?

I find it far simpler and much less stressful to simply report my gains and income, pay my fair share of taxes, and be in a safe, legal position to profit as BTC increases in value in the coming years. If you consider your mining a "business" you get to take advantage of all sorts of deductions and credits to reduce your taxable income, whether that be your mining income or your normal/salary income. I got to deduct the cost of the miners I purchased last year and the short/long term losses incurred by buying those miners with BTC! Filing actually increased my tax refund!

But not the all people who are mining can change into P2P way,sp for that we need clarification from legal side,as far as I know if your country don't have regulations then you should be payable your income taxes which are generated from miners.

I think you are right, it really depends on which country you are and if cryptocurrency is legal there then you should pay tax from your income in generated bitcoin from your miners. And probably as what I have heard most likely country strickly having a tax is in the U.S.

Here is the link of countries that Crypto mining income with 0% tax on bitcoin/cryptos:
https://coinsutra.com/tax-free-bitcoin-countries/

Heads up, capital gains tax exemption from long-term holding is not the same as income tax exemption from mining! The only country on this list that appears to allow for tax-free mining is Belarus.

As everyone in this thread said, the most important factor is the coutnry you live in. Some countries have already created laws regarding cryptocurrencies and are applying them while others have not even started that process.

Ain't know if that is right mate, taxes are actually an advantage in establishing a business. After a year or two, those taxes you have paid from the government agencies will be back to you with a lot of exciting benefits you can actually avail with their programs. Also, if you have very small scaled mining, microbusinesses are allowed not to have taxes but if your business is about 20,000 above in capital total, you will be required to register your business as well and pay your taxes.

Bitcoin mining is not yet an established profitable platform today so you can actually stop minding about the taxes and operate the system.

This again depends on your country. Belive me, if you would open a business in my country after a year or two you will probably have more disadvantages when we talk about the government and its laws because right now they are all greedy and vicious. There are some countries who supports people to open new businesses but i think there are also countries who all they want is to take advantage of business holders.

..we all know that taxes is the life blood of the economy,,if there are no tax,,the economy will die,,the enforcement of tax in Bitcoin mining will depend on the country you lived...but as far as i know,,if Bitcoin is declared as an asset,,then that is the time that you should pay the corresponding tax fee.

Why would need to wait up for a year or two? Taxation rules would really for these things to be paid up immediately,failure to do so would really have
corresponding problem to be faced later on. Tax funds usage will matter on how a particular government would use it fairly or would really be just corrupted.
For mining, since its not still legalized on most places this activity isnt taxable.

bitcoin is already declared as  an asset ever since it came out  . aside from asset bitcoin is also a currency  .  and yes i agree on you tax is the life of the economy but only if the leader or the government officials of your country is not corrupt  .  anyway  ,   mining should be taxable becuase it is still considered as a job .  its only up to the miner if he will pay his tax or not becuase small scale miners arent really required or force to pay thier taxed not unlike to large mining corporations because they took up alot of space .

There are some cases where the government takes advantages of new businesses. While they make regulations, they are able to generate income by imposing taxes. It may be a win-win type of situation where businesses will benefit from the protection they get but most of the time they are exploited by these corrupt politicians. What's even sad is its hard for small business enterprises to put up a business without being given the opportunity to avail of loans or govt subsidies because of their small capacity. They then resolve to loan sharks where interest rates are ridiculously high. The government should consider even the small business owners.

I think this is correct, and would also apply to our signature campaign income for instance. The problem is, when I learned about these things it was too late, so I never reported anything. Now I wonder what the situation would be. Im not looking forward to some penalties for unreported income. I assume a lot of people that started posting here as a hobby for peanuts and then BTC went x100 found themselves on a similar situation. So there is a mix of income tax (from the payments) as well as capital gains (from the increase in price over time). It's really a nightmare trying to keep track of all of this so im going to stay safe without selling a single satoshi until I know exactly how to go about things.