Taxes Mining Bitcoins

[NotFuzzyWarm]

Along the lines here: Got 2 tax bills from my state today. One is for Sales-Tax due ($149) on 2 s9's I got in 2016 and 1 for a tax-due adjustment ref 2013 for $197.

The Sales tax I understand - if the import value exceeds $2500 and CBP requires duty to be paid (was like $49) then the broker (UPS) tells your state about it and if your state requires paying Sales tax on out-of-state/country purchases they get interested...

Not sure about the 2013 income adjustment bill - didn't start mining until 2014 - but cheap enough to just pay anyway

[QuintLeo]

Why tax when the cost is already there in the form of hardware and electricity?

 Because the government wants all the money it can get away with grabbing - and sometimes MORE than it is legally owed.

[Shenzou]

Why tax when the cost is already there in the form of hardware and electricity?

 Because the government wants all the money it can get away with grabbing - and sometimes MORE than it is legally owed.

Bitcoin's price is gradualy going up and the income of the people who mine it as well, and obviously in the countries where goverments are actually keeping an eye on the bitcoin know how much poeple make from it without paying taxes, so eventualy they will either make electric cost for the ones who mine bitcoin a bit more, or they make them pay taxes, imagine an unmployeed person who is making like thaousands of dollars without paying any taxes.

[hap0py]

In the USA the IRS defines income as occurring as soon as you have a *right* to collect the income, not when it is received.  Deteemining when that occurs with different payout methods and pools (e.g. nanopool doesn't really show a list of rewards, only a growing number and a list of payouts) is proving problematic.

Anyone have real knowledge, not opinion?

[DebitMe]

Can't speak to Canada.

 In the USA, IRS rulings are that Bitcoin mined does not become taxable 'till you either sell it for cash or spend it on "tangible property" at which point it becomes taxable at the cash value of the amount of Bitcoin you spent.

 There's a lot more verbage involved, but that's the short-form basic information you need.

 I suspect state and local income taxes (where applicable) have to follow the IRS rulings on the subject.

There is also some discussion now about trading for altcoins not meeting a like kind exchange rules.  The IRS has not ruled one way or another, so technically the correct way would be if you traded those bitcoin for ethereum, it would be like you sold the coins for cash and creates a taxable event.

State and local do not necessarily have to follow IRS rulings, but they generally do.  What you mainly need to watch out for is depreciation on mining equipment (many states do not conform to federal bonus or 179 standards) and gain/loss on sale of equipment.  I have not heard of a state not following the rules of when bitcoin becomes a taxable event, but always consult your local code or a tax professional familiar with your area.

[DannaWonder]

Somebody can help me about the taxes mining Bitcoins in Canada and USA. Taxes to import the hardware, income tax,  etc.

Taxes on importing those hardware are inevitable since tariffs are always assessed on goods entering every country specially if the price of it is quite high. Income taxes from bitcoin mining operation is quite hard to compute. I don't think there are already countries who gave the exact formula on how to compute taxes from it. Things that should be considered are, the expense that you had for mining the coin. Where are they going to base the income that you got from mining since the transactions are somehow anonymous how can they get a record of the exact number of coins that was mined by the farm.

[DebitMe]

Somebody can help me about the taxes mining Bitcoins in Canada and USA. Taxes to import the hardware, income tax,  etc.

Taxes on importing those hardware are inevitable since tariffs are always assessed on goods entering every country specially if the price of it is quite high. Income taxes from bitcoin mining operation is quite hard to compute. I don't think there are already countries who gave the exact formula on how to compute taxes from it. Things that should be considered are, the expense that you had for mining the coin. Where are they going to base the income that you got from mining since the transactions are somehow anonymous how can they get a record of the exact number of coins that was mined by the farm.

Probably best to keep your opinions to yourself when you have no idea what your talking about. Helps to not spread false information that makes you look stupid. I believe i found issues with every single sentence you wrote.

[QuintLeo]

Somebody can help me about the taxes mining Bitcoins in Canada and USA. Taxes to import the hardware, income tax,  etc.

Taxes on importing those hardware are inevitable since tariffs are always assessed on goods entering every country specially if the price of it is quite high. Income taxes from bitcoin mining operation is quite hard to compute. I don't think there are already countries who gave the exact formula on how to compute taxes from it. Things that should be considered are, the expense that you had for mining the coin. Where are they going to base the income that you got from mining since the transactions are somehow anonymous how can they get a record of the exact number of coins that was mined by the farm.

 Tariffs vary widely - and in many cases on specific items being imported into strong "Free Trade" countries IS in fact zero.

[ac1905]

In regards to Canada, they're going after employee discounts given by employers. If they're going after nickels and dimes, how thirsty will they be for bitcoin mining?

[hookcoin]

Certainly bitcoin taxation is unlikely. Because mining is not acceptable to governments, it can not be taxed. Bitcoin mining is a very profitable mining industry in the world.

[gbBit]

I am keeping the transaction emails from coinbase when mining deposits hit my account and using that as the cost basis for each mining payment.    Not perfect but it will work.

My understanding is that since the process is a bit immature, the IRS is using some discretion with how people calculate their cost basis / fair market value, but they'll expect you to be consistent.  I.e. if you cant cherry pick exchange rates from different exchanges or times to help you setup a better cost basis. My advice would be to start a very thorough spreadsheet to track your income if you plan on making more than a grand per year.

Don't make life so hard on yourself buddy.  In Coinbase just go to Tools->Reports  then create either a transaction history or cost basis for taxes report.  Report is well laid out and clearly shows all you've done in your account.

[gbBit]

What sort of depreciation models are you guys using for your miners?  When I first started I came up with an exponential formula to depreciate each miner monthly by 10% each month from it's previous month NBV rounded up to the nearest $25.  This would make each miner fully depreciated around 2 years which I figure is close to the working life of a miner.  I was also trying to find a balance between difficulty and BTC price, but since I came up with that formula the BTC price has exploded so I'm thinking of possibly changing me deprecation model and interested in what other are doing.

[MiningBattalion]

What sort of depreciation models are you guys using for your miners?  When I first started I came up with an exponential formula to depreciate each miner monthly by 10% each month from it's previous month NBV rounded up to the nearest $25.  This would make each miner fully depreciated around 2 years which I figure is close to the working life of a miner.  I was also trying to find a balance between difficulty and BTC price, but since I came up with that formula the BTC price has exploded so I'm thinking of possibly changing me deprecation model and interested in what other are doing.

Mining is a one process of bitcoin system and it's a transaction process like selling and buying are the work in this and to the bitcoin mining tax is not bad because it's going to government  so this are taxes mining Bitcoins.

[QuintLeo]

What sort of depreciation models are you guys using for your miners?  When I first started I came up with an exponential formula to depreciate each miner monthly by 10% each month from it's previous month NBV rounded up to the nearest $25.  This would make each miner fully depreciated around 2 years which I figure is close to the working life of a miner.  I was also trying to find a balance between difficulty and BTC price, but since I came up with that formula the BTC price has exploded so I'm thinking of possibly changing me deprecation model and interested in what other are doing.

 Won't fly with the IRS, I'm 99.99% sure they count cryptocoin miners as "computer equipment" (which they are per most definitions) and require you to use THAT insanely long (even for REAL computers) depreciation timeframe.

[Agostosmori]

Somebody can help me about the taxes mining Bitcoins in Canada and USA. Taxes to import the hardware, income tax,  etc.

Taxes for your income from bitcoin mining should only be computed once you sold your coins for a fiat currency. But government should also compute your expenses first before taxing your income. And also tax should be computed on the amount that you farmed the coin not on how much you sold it.

[roddy5]

Somebody can help me about the taxes mining Bitcoins in Canada and USA. Taxes to import the hardware, income tax,  etc.

I Think taxes can only be computed once you converted your income to your
local currency less the expenses you had for your operation.

[BeerMan81]

In the USA the IRS defines income as occurring as soon as you have a *right* to collect the income, not when it is received.  Deteemining when that occurs with different payout methods and pools (e.g. nanopool doesn't really show a list of rewards, only a growing number and a list of payouts) is proving problematic.

Anyone have real knowledge, not opinion?

Irrelevant. I think It is when you trade for FIAT. They can't really track your wallet earnings, as this is truly private in nature, but i'm sure they will know sold currency on Coinbase (for example). Could be 1099-MISC or something. We shall see.

[Yarsk]

Well I was studying the tax policies of Canada and the USA against bitcoin mining and other crypto related activities and I stumbled into the mind blowing fact that the both countries has a friendly law towards bitcoin like in the USA. IRS rulings are that Bitcoin mined does not become taxable untill you either sell it for cash or spend it on tangible property at which point it becomes taxable at the cash value of the amount of Bitcoin you spent.
And in Canada they possibly don't have any law on tax against bitcoin mining and activities apart from the bills you pay on power supply in carrying out your bitcoin activities.

[bitcad4u]

Well I was studying the tax policies of Canada and the USA against bitcoin mining and other crypto related activities and I stumbled into the mind blowing fact that the both countries has a friendly law towards bitcoin like in the USA. IRS rulings are that Bitcoin mined does not become taxable untill you either sell it for cash or spend it on tangible property at which point it becomes taxable at the cash value of the amount of Bitcoin you spent.
And in Canada they possibly don't have any law on tax against bitcoin mining and activities apart from the bills you pay on power supply in carrying out your bitcoin activities.

Taxes in the bitcoin are computing the taxes once convert into income policies ,Canada and USA are the against to bitcoin mining and other crypto related activities .it's ruling are that bitcoin mined does until that bitcoin cash value of the amount of bitcoin you spend , mining and activities apart from you pay on power supply in bitcoin activities.

[ajqjjj]

Well I was studying the tax policies of Canada and the USA against bitcoin mining and other crypto related activities and I stumbled into the mind blowing fact that the both countries has a friendly law towards bitcoin like in the USA. IRS rulings are that Bitcoin mined does not become taxable untill you either sell it for cash or spend it on tangible property at which point it becomes taxable at the cash value of the amount of Bitcoin you spent.
And in Canada they possibly don't have any law on tax against bitcoin mining and activities apart from the bills you pay on power supply in carrying out your bitcoin activities.

Taxes in the bitcoin are computing the taxes once convert into income policies ,Canada and USA are the against to bitcoin mining and other crypto related activities .it's ruling are that bitcoin mined does until that bitcoin cash value of the amount of bitcoin you spend , mining and activities apart from you pay on power supply in bitcoin activities.

Not only this if you want to convert the bitcoin in the huge numbers you should show the income way to have the current accounts in your bank that is how the every country government follows with their banks.
I have tried to have the bank account especially for the trading and mining only but asked me file the taxes and askes to create the current account in such way.