For tax implication purposes, crypto staking and mining taxes are considered as income tax. Therefore, if a taxpayer has received rewards as a result of staking cryptocurrency or mined it then the IRS requires it to be treated as regular income with respect to the cryptocurrency's fair market value at the date of receipt.
Unlike crypto sales, proceeds from mining are considered as income rather than capital gains or capital losses. The same is applicable in the case of crypto staking as well.
Crypto tax calculation software applications are ideal for calculating crypto mining and staking taxes. This is mainly because it is essential to be aware of the fair market value of each and every instance where the trader has received staking or mining rewards.
A crypto tax calculation software application can be of help in case one does not have the fair market value for all such instances. These software applications also allow the trader to club all such transactions under 'income' and calculate the appropriate 'income tax' amount that they attract.
It must be noted that once the mined or staked cryptocurrency is sold or traded it will attract capital gains (or loss) tax implications and they need to be reported and filed accordingly. The following example will explain the different tax implications on crypto mining and staking:
1 bitcoin mined on 1st February 2018 worth $6000 (income)
Sold on 1st March 2018 for $6500
Considering this example
Income tax: US $6,000
Capital gains: $6,500-$6000= US $500
The income tax will be calculated depending on the taxpayer's tax bracket and whether the capital gain is long term or short term. In this case, the capital gain was short term. In case there is a loss, it will be deducted from the overall taxable income with the applicable threshold.