Bitcoin Forum
October 23, 2018, 09:35:42 PM *
News: Make sure you are not using versions of Bitcoin Core other than 0.17.0 [Torrent], 0.16.3, 0.15.2, or 0.14.3. More info.
 
   Home   Help Search Donate Login Register  
Pages: [1]
  Print  
Author Topic: Deducting electricity and or equipment costs from taxes?  (Read 2207 times)
bitcoindaddy
Sr. Member
****
Offline Offline

Activity: 479
Merit: 500


View Profile
April 28, 2011, 02:36:24 PM
 #1

It's my understanding that I, as an individual can't deduct the cost of electricity or hardware costs from mining proceeds while doing my taxes. You have to start a company in order to deduct things like that or am I wrong?
1540330542
Hero Member
*
Offline Offline

Posts: 1540330542

View Profile Personal Message (Offline)

Ignore
1540330542
Reply with quote  #2

1540330542
Report to moderator
1540330542
Hero Member
*
Offline Offline

Posts: 1540330542

View Profile Personal Message (Offline)

Ignore
1540330542
Reply with quote  #2

1540330542
Report to moderator
Advertised sites are not endorsed by the Bitcoin Forum. They may be unsafe, untrustworthy, or illegal in your jurisdiction. Advertise here.
ribuck
Donator
Hero Member
*
Offline Offline

Activity: 826
Merit: 1003


View Profile
April 28, 2011, 03:03:13 PM
 #2

In most countries, if an expense is "necessarily incurred" to earn the income, it is deductible.
bitcoindaddy
Sr. Member
****
Offline Offline

Activity: 479
Merit: 500


View Profile
April 28, 2011, 03:11:33 PM
 #3

I should have mentioned - I'm in the US.
eleuthria
Legendary
*
Offline Offline

Activity: 1750
Merit: 1001



View Profile
April 28, 2011, 03:24:32 PM
 #4

You can deduct the hardware and electricity costs (pro-rated unless your rigs are on a separate line).  However, there are a few things to keep in mind before you start trying to deduct BitCoin related expenses:

1) You must report your BitCoin income in order to deduct expenses incurred.
2) You must be able to show a clear profit motive in order to deduct expenses in excess of revenues (ie: Show your expenses are for a BUSINESS not a HOBBY).
3) Equipment costs are not deducted outright, but depreciated.  You will likely be able to deduct your entire equipment cost through 179 or the Special Depreciation Allowances (federal only for special depreciation allowance) in the first year, assuming your adjusted gross income is positive.

It would all be deducted on a Form 1040 - Schedule C.  Depending on your state, it may be cheap to form a business (fictitious business name/registered with your city/county if required).  This will add validity in your argument that you are doing this as a business rather than a hobby.

RIP BTC Guild, April 2011 - June 2015
tomcollins
Full Member
***
Offline Offline

Activity: 182
Merit: 100


View Profile
April 28, 2011, 04:00:23 PM
 #5

I should have mentioned - I'm in the US.

You don't need to start a company.  If it's a legitimate business expense (I'm no tax attorney, so I won't get into whether it is or not), you can deduct some expenses.  But if you are using the machine for anything other than business, it's going to be harder.

For example, my wife is a massage therapist.  She uses 2 rooms in our house exclusively for massage.  She is allowed to deduct the % of square footage of the house used for the business, and that same percentage of the utility bills for the business.

But it's really easy to screw this up and try to take credit for things you aren't supposed to.  Consult a tax attorney before taking the advice of anyone here.
Pages: [1]
  Print  
 
Jump to:  

Sponsored by , a Bitcoin-accepting VPN.
Powered by MySQL Powered by PHP Powered by SMF 1.1.19 | SMF © 2006-2009, Simple Machines Valid XHTML 1.0! Valid CSS!