How is Bitcoin Mining Taxed?
One of the most challenging factors when it comes to starting a Bitcoin mining operation is taxation. This article provides some general principles to help guide you through the various issues when it comes to Bitcoin mining.
This post is not intended to be a financial advice. It should not be used as a substitute for professional advice.
All virtual currencies and Bitcoin are treated as property under the IRS’s current tax law. It is taxed in the same way investments in other commodities or stocks are.
When a person sells or swaps a cryptocurrency for another, the gains or losses are subject to taxation. The tax treatment depends on the market value at the time of the transaction and how long the bitcoins are in circulation.
Cryptocurrency mining is typically taxed as income.
This means that miners are required to pay a percentage of the value of their coins they earn during the course of their work.
Mining income is self-reported on Form 1099-DIV. It is the same as any other self-employed individual filing tax.
If you have any specific questions about taxation, consult a tax advisor. There are a number of tax specialists who can help.
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