Bitcoin Forum

Is it true in the US the mined bitcoins must be reported without any reduction for mining costs, i.e. miner costs, power, and the value is what btc is valued at the time they were mined?

This seems grossly unfair for the hobbyist miner.  If mined bitcoins were only taxed when finally sold or bartered a retiree could pay those few extra thousand dollars in bills, that accrue each year from nothing more than living, by cashing in a few bitcoins without reaching a level of income that would be taxable.  As it is, paying tax on every bitcoin mined, tax will have been paid on those sold making up the difference between the retirement SS check and the taxable income level that for everyone else would be non-taxable income.  

Last year and this will for most of us hobbyist miners be the only years with appreciable bitcoins mined.

You can only deduct expenses that are no more you hobby income, and then only using itemized deductions. This is only beneficial if your expenses plus your other normal itemized deductions are less than the standard deduction.

Income over $400 problem year is one of the criteria that you are running a business, so in your example you probably should look at filing it as self-employed income. That way you get to deduct expensive against your business income, but you also pay any self-employed taxes.

So, what I probably need is a bitcoin IRA with no yearly upper limit for contributions.