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Author Topic: Taxes Mining Bitcoins  (Read 7562 times)
whateverittakes
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December 01, 2017, 03:21:35 AM
 #61

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


I don’t typically post on here, but this topic has garnered far too many ‘opinions’ instead of facts. To the OP: see the following for taxation of currency mining in the US.

Also, as mentioned by others, nearly every reputable pool will offer a downloadable spreadsheet of your data for tax and audit purposes. If they don’t - good luck.

Keep tabs on every purchase and use it as a write-off, from monthly rents to power cords. Larger items, such as your ASICs, may have to be depreciated over time (and you may want to in order to reduce future tax burdens). Typically these are on a 5 year straight line depreciation, or you can choose to do a Section 179 deduction and write off the full amount in year 1. See your CPA for all tax questions and what is best for you.

IRS Notice 2014-21, Q-9

https://www.irs.gov/pub/irs-drop/n-14-21.pdf

Q-8:  Does a taxpayer who “mines” virtual currency (for example, uses computer resources to validate Bitcoin transactions and maintain the public Bitcoin transaction ledger) realize gross income upon receipt of the virtual currency resulting from those activities?

A-8:  Yes, when a taxpayer successfully “mines” virtual currency, the fair market value of the virtual currency as of the date of receipt is includible in gross income.  See Publication 525, Taxable and Nontaxable Income, for more information on taxable income.

Q-9:  Is an individual who “mines” virtual currency as a trade or business subject to self-employment tax on the income derived from those activities?

A-9: If a taxpayer’s “mining” of virtual currency constitutes a trade or business, and the “mining” activity is not undertaken by the taxpayer as an employee, the net earnings from self-employment (generally, gross income derived from carrying on a trade or business less allowable deductions) resulting from those activities constitute self-employment income and are subject to the self-employment tax.  See Chapter 10 of Publication 334, Tax Guide for Small Business, for more information on self-employment tax and Publication 535, Business Expenses, for more information on determining whether expenses are from a business activity carried on to make a profit.
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December 01, 2017, 04:07:23 AM
 #62

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


i suggest researching if have a government regulation about mining in the said country because here in my country mining have nope taxes but the electricity power fees is very expensive, payment with expensive electricty i think is enough to pay taxes including in the electricity bill.
It totally balls down on the location just as you have said. I have been mining for a while and apart from the tax I had to pay alongside the hardware, the electricity bill I pay, there has been no form of tax. The only way I guess I may have to end up paying tax is if my government decides to start taxing when converting to fiat while making use of the exchanges.

As a Canadian living in Ontario, I have been mining bitcoins and altcoins for quite a while and don't pay imposes on the bitcoin that I mined. In any case, that is for the most part since I don't offer.

In any case, from what I heard, on the off chance that you are a business and acknowledge bitcoin, you need to report it. In the event that you mined bitcoin and sold it, it considers capital pick up.
Well, those are capital gains and unless you report it, mostly by converting into fiat with the use of an exchange, then this is where tax comes in. Even without mining in some places and you just buy BTC, it is known that you will end up having some gains on it which means it is subject to tax. So, if you decide to mine, pay your electricity bills and leave your funds in your wallet, then tax obviously does not apply.
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December 09, 2017, 04:55:19 AM
 #63

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.


As far as I know, the mining is not taxed or something has changed. When you deduce that it is possible and that a rarity. What taxes do you mean, in my country all this is free.

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December 09, 2017, 03:07:48 PM
 #64

In Europe you have to pay income tax.

Yes, that's the burden of Europe

At least in Europe your house doesn't get raided and your computer confiscated if you don't. Sure you have to pay taxes and a stupid VAT, but I'd rather live here than in the US where the authorities can steal your stuff and put you in jail with murderers and rapists for selling Bitcoins.

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.


As far as I know, the mining is not taxed or something has changed. When you deduce that it is possible and that a rarity. What taxes do you mean, in my country all this is free.

Mining isn't taxed but income from it is. You don't have to report mining, unless you have a mining business and keeping books, but if you exchange the coins and get fiat you are supposed to pay income tax.


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December 10, 2017, 02:46:20 PM
 #65

I don't think there are any tax laws on bitcoin mining. However, in the United States, the tax law only applies when you buy, sell or spend bitcoin on a tangible commodity.

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December 10, 2017, 04:36:27 PM
 #66

I don't think there are any tax laws on bitcoin mining. However, in the United States, the tax law only applies when you buy, sell or spend bitcoin on a tangible commodity.

First most of government and politicians do not know about bitcoin and it's technology. Every bitcoin related earnings will be considered as service oriented earning only. And most of the government gives a 15 percent taxation on the bitcoin earning when you want to exchange it as a fiat currency.
If you cross the earning tax payers limit means we have to pay tax for all the earnings you are making from bitcoin or other crypto earnings.

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December 10, 2017, 07:44:19 PM
 #67

I don't think there are any tax laws on bitcoin mining. However, in the United States, the tax law only applies when you buy, sell or spend bitcoin on a tangible commodity.

Could you explain this? What should I do when I buy a meal in a restaurant for Bitcoin? Should I take the check to the tax office and pay the tax? Cheesy
I would expect the authorities to demand people pay taxes from Bitcoins they're holding ahd report the gains every year. This way if they decide to spend their coins there won't be any misunderstandings. If you weren't asked to pay taxes every year you could later buy a large number of cheap products like beer cans and hide the purchase never having to report the transaction.

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December 12, 2017, 06:48:02 AM
 #68

Quint can you cite this ruling?

The last position I saw the IRS taking was that you were required to recognize mined bitcoin as income when it was generated and then take a capital gain / loss when selling.



According to the IRS, when a taxpayer successfully “mines” Bitcoins and has earnings from that activity whether in the form of Bitcoins or any other form, he or she must include it in his gross income after determining the fair market dollar value of the virtual currency as of the day he received it. If a bitcoin miner is self-employed, his or her gross earnings minus allowable tax deductions are also subject to the self-employment tax.

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December 13, 2017, 05:57:07 AM
 #69

Currently, Canadian regulatory authorities posit that digital currency—such as bitcoin and other cryptocurrencies—does not constitute either money or currency. In 2014, the Bank of Canada released a position paper concluding that bitcoin and other cryptocurrencies fail to meet the definition of money. In 2013, an interpretation letter released by the Canada Revenue Agency stated that bitcoin and other digital currencies were not currency for Canadian tax purposes. Instead, the Canada Revenue Agency concluded that a bitcoin was a commodity, like gold or oil. So, the tax rules concerning barter arrangements apply to bitcoin transactions. As mentioned, the Canada Revenue Agency treats bitcoin—and digital currencies generally—as a commodity for income-tax purposes. As a result, bitcoin transactions are subject to the same rules as barter transactions—that is, transactions where one commodity is exchanged for another.

Generally, this means that a gain or loss from a bitcoin transaction will be treated as either (i) income or loss from business or property or (ii) a capital gain or loss. The difference comes with important tax implications. The full amount of business or property income is taxable, while only one-half of a capital gain is taxable. On the flip side, while only one-half of capital losses are deductible, one may fully deduct losses associated with business or investment activity.

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December 13, 2017, 04:12:15 PM
 #70

It is like any other venture, if it isn't defined as it yet, it eventually will be.

When you decide to setup a mining rig, you invest in hardware and electricity. Like any other business, you're generating revenue, and (hopefully) a profit which is the revenue offset by your expenses (hardware depriciation) and electricity costs.

I assume you'd need to calculate the hardware depriciation based on estimated difficulty adjustments and your current electricity rates (since it determines how long you'll actually be able to run the rig profitably), then subtract your usual average electricity expenditure over the last 12 months from your new electricity expenditure to get a reasonable idea for how much of your electricity rates are related to your mining operation (assuming that you're running the rigs from home).

Whether it is taxable or not, you ought to start tracking these things, because at some point it will become taxable and while you hopefully won't have to pay taxes retrospectively this is still information you should track for the sake of your operation, in order to ensure you maximize its profitability.

So in the end, taxes or not, your action tasks becomes the same, you should at least run your business with the expectation that eventually you'll need to pay taxes, because it will result in a better-run operation and if it turns out you don't need to pay taxes in the end (then celebrate the fact that the prospect of paying taxes made you up your mining operation game)

Good luck
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December 14, 2017, 12:55:09 AM
 #71

In the UK if you are mining bitcoins then HMRC regards this as a trade and will charge any profits to income tax and national insurance, so presume similar will apply. They are starting to clamp down too.
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December 17, 2017, 05:13:57 AM
 #72

Um, after the cost of the hardware itself, the electricity, and the time of having to do it, to get a very small trickle of coin I'm not reporting that on a tax form. The whole point is this is a decentralized currency that the government and IRS has no place in regulating. Don't report. Let them prove you owe something and fight for it.
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December 17, 2017, 06:02:49 AM
 #73

Um, after the cost of the hardware itself, the electricity, and the time of having to do it, to get a very small trickle of coin I'm not reporting that on a tax form. The whole point is this is a decentralized currency that the government and IRS has no place in regulating. Don't report. Let them prove you owe something and fight for it.

Great advice!  Why don't we all just disobey the law because we don't want to do something.  Fucking idiot.  Pay your taxes people, its not hard and will save you time and money in the future when you don't owe interest and penalties and possibly jail time.


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BTC  ◉PLAY  ◉XMR  ◉DOGE  ◉STRAT  ◉ETH  ◉GRC  ◉LTC  ◉DASH  ◉PPC
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DICE           
BLACKJACK
PLINKO       
VIDEO POKER
ROULETTE     
LOTTO             
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