Quote from: ekstremista on April 03, 2024, 06:11:55 AM

Just wondering if anyone else has experienced this particularly nasty surprise from the IRS and Coinbase:

Long story short, Coinbase is reporting ALL staking income to the IRS, from way back when ETH staking went online in 2020. It's not just for 2023 or since April 2023, when you could first unlock and sell your ETH staking rewards.

Needless to say, that's going to be a hefty extra tax bill for those who staked since the start. Even worse, you get hit whether or not you sell your ETH rewards for US dollars. As I gather, Coinbase is basically using the ETH prices of April 2023 to decide the US dollar amount to report to the IRS (on form 1099-MISC).

This is the first time you need to pay tax in US dollars for staking rewards that were never sold and remain as ETH.

Can anyone confirm or disprove this? I hope I'm wrong, but somehow it doesn't seem so.

uhh you shouldn't be surprised at having to pay taxes on your staking rewards. Everyone knows you have to pay taxes on staking rewards. You owe taxes based on the price it was when you received it. Coinbase provides you with exactly how much you earn in both ETH and dollars every time they give you staking rewards. So all you have to do each year is get the report on Coinbase from the Account section or wherever, add up the dollar value for all your rewards for that year, and put that income on your taxes. It's real easy.

And yes you've had to do it since whenever ETH rewards became unlocked, I was thinking that was the merge back in 2022, but maybe it was the next update in April 2023 as you say. I paid taxes for 2022 based on the Sept 2022 price for all my previously earned staking rewards, plus the earnings the rest of the year after that, since that's when the ETH rewards were actually added to my account and Coinbase started stating how much I was earning in dollars, but I suppose maybe technically the April 2023 event was perhaps the actual taxable event if that's when unlocking was actually allowed.

I have no idea why you would think that you don't owe taxes on your previous staking rewards. IRS has long made clear that any staking rewards count as income for tax purposes and the taxable event is when you gain access to those rewards. So yeah, if April 2023 was when the stuff got unlocked, then that is the taxable event. So for 2023 taxes, your income as of April 2023 is ALL your staking rewards up to that point multiplied by the ETH price at that point, plus the dollar value of your staking rewards the rest of the year as you received them.

So no you aren't wrong. This is the case. I guess sucks that you didn't know this before but this tax policy has been publicly known for years. Shouldn't be a big deal, considering price in April 2023 was much lower than it is today and it's super easy to figure out your taxable income on Coinbase.