Does anyone know if I have to form an LLC to claim my mining expenses for equipment and electricity, etc... Or is there a way to claim them on a normal return using Turbo Tax. I'm thinking under self employment or a sole proprietorship. I welcome your thoughts....
As a company, or self-employed, you can deduct all applicable expenses from your net profit, electricity, etc, as well any mining hardware in the year it went into service. But If you set up as self-employed, you'll also be paying the share of self-employment taxes (social security and medicare).
As an individual, hobby expenses can be deducted but only up to the profit you make from your hobby (mining in this case) and no more than 2% of your AGI. You also have to include it as part of your Schedule A and itemize all your deduction, which could come out as less than the standard deduction anyway, in which case not worth it.
In the end it matters how much expenses you have and whether it's worth claiming it through an SE business.