IRS Issues New Ruling on Crypto Staking Income Reporting
The Internal Revenue Service (IRS), the leading tax authority in the United States, has released a significant ruling addressing the treatment of income derived from crypto staking.
The recently issued Revenue Ruling 2023-14 now specifies that cryptocurrency staking rewards, similar to other forms of income such as money, property, and services, fall under the category of gross income. As a result, taxpayers are required to report their staking earnings in the year they were received as part of their annual income.
The ruling specifically pertains to income earned through the process of staking digital assets on proof-of-stake (PoS) blockchains. In the PoS consensus mechanism, cryptocurrency holders lock up their funds as collateral to support the network’s operations and ensure the security of the blockchain. In return, participants are rewarded with newly minted tokens.