Tax time in the US

Cryptocurrency
#1

In the beginning there was a nvidia gpu and miner gate. I started out with 1 gpu when I wasn’t using the computer for work or gaming. It was an interesting conversation starter explaining how I converted 25 cents of electricity to 25 cents worth of an alt coin.

Yes life was good, however profits were not. that was about 4 years ago
Fast forward to today. I running a small miner farm of 11 asic miners. I have huge electric bills, I have a lot of coin to usd transactions going on, I have equipment purchases, I have miner repairs as well.

Irs taxes come due in a few months,
what do I need to do to deduct operating expenses from profits?
Do I need a business license?
What IRS forms do I need to be looking at?
I’m planning to use a tax service like HR Block, any suggestions ?

thanks

1 Like
#2

You’ll have to establish your setup as a business. Meaning, getting a business license and taking any other steps that your city or state may require. Once you’ve established your “business” you can write off any money spent or expenses that is business related.

Keep in mind that certain states may have initiated local legislation that may prohibit you from operating such a business or even for private residential use. Also you may have to label your business as a networking or server provider, and not a crypto mining company.

If worst comes to worst, you could always devise a completely different business that just so happens to have ASIC miners plugged in somewhere. Try working with a local tax agent or CPA first. Chains like HR Block won’t go to great lengths to take care of you and your business

#3

You can get a federal tax ID for free and takes about ten minutes….

I’ve used my tax ID on another business when doing my taxes and have not had any issues to date. I claim my vehicle miles/ home office/ expenses.

#4

not true, you can be a sole proprietor and not file a single thing regarding a license.

1 Like
#5

This is regards to the point of trying to establish his operation as “business” as using the expenses as a write off. You can’t just write off whatever you feel like, even if it’s in direct correlation with your earnings

#6

Sole in schedule C.

#7

That’s a gray area. Sure, if you don’t get audited then it’ll be fine. But with no established business documented then it’s a bit of a gamble

#8

so i need a cpa over a h and r block type. thanks
sch c it is

I’m planning on writing off power usage- data from a separate watthour meter, purchases of new mining equipment, cost of repairs, shipping costs and equipment costs to upgrade the shop’s power system.

#9

In the USA there is something called a Sole Proprietor, it requires no paperwork filing. It works a little different and everything earned is considered personal income tax but yes…you can write off everything like you were a s corp or llc.

This is what I do.

#10

No offense, but talk to a tax professional. You are not getting the advice you need here.

#11

This is done how ?

#12

Where I live, you must fill out an application at city hall and pay whatever fee is due. For example, my city charges $100. The application must state the type of business and location of operation. If your location isn’t a commercial zoned area then label your address as an “office” location, that’s just to ensure that your application won’t get denied. Then apply for a federal tax ID online, that’s free. You can get all this done in a day