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Mining crypto how to deal with the tax

studdlymurphy

Hi All,
Im searching but cant seem to see, if it already here maybe someone can point me to it?

Im setting up a mining rig but sure how to deal with the tax.

if the rig earns about 10euro per day:
Can I average that to a week or month or even quarter before paying the tax on the earning?
How often do I need to pay the tax? can I wait until I am cashing out to euro?
Is there any options to save some of the tax due?
the tax due, is that at the marginal rate of income tax? 20% or 40% depending on what your current tax situation is.
USC, this is due also?.

Thank you and apologies if this info is already some place else but I cannot see it.

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JibJabWibWab

studdlymurphy wrote: »

Hi All,
Im searching but cant seem to see, if it already here maybe someone can point me to it?

Im setting up a mining rig but sure how to deal with the tax.

if the rig earns about 10euro per day:
Can I average that to a week or month or even quarter before paying the tax on the earning?
How often do I need to pay the tax? can I wait until I am cashing out to euro?
Is there any options to save some of the tax due?
the tax due, is that at the marginal rate of income tax? 20% or 40% depending on what your current tax situation is.
USC, this is due also?.

Thank you and apologies if this info is already some place else but I cannot see it.

If you just hold the mined crypto in your wallet you won't be liable for tax until you sell it for cash or trade the crypto for another crypto.

Google Capital Gains Tax (CGT) to understand what tax you would be liable to if you sell or trade the crypto.

studdlymurphy

JibJabWibWab wrote:

Google Capital Gains Tax (CGT) to understand what tax you would be liable to if you sell or trade the crypto.

OK so income tax on the mined currency and then CGT on any gain in value but only payable when sold?

JibJabWibWab

studdlymurphy wrote: »

OK so income tax on the mined currency and then CGT on any gain in value but only payable when sold?

No income tax, just CGT when you sell the crypto for cash or another crypto.

It's exactly the same as if you were actually mining gold, you're not taxed until you sell it.

Mellor

JibJabWibWab wrote: »

No income tax, just CGT when you sell the crypto for cash or another crypto..

That’s incorrect.
Mining crypto is income. It is taxed as income tax.
Holding is CGT.

studdlymurphy

Mellor wrote:

Thatâ€™s incorrect. Mining crypto is income. It is taxed as income tax. Holding is CGT.

Thank you so how do I calculate it? Daily would be a huge task as the rate changes Daily or can you average per week or month? I'm not trying to cheat the tax I want to be tax compliant also don't want to be tortured calculating the tax or big account fees.
Thanks for the advice mellor

Rob2D

studdlymurphy wrote: »

Thank you so how do I calculate it? Daily would be a huge task as the rate changes Daily or can you average per week or month? I'm not trying to cheat the tax I want to be tax compliant also don't want to be tortured calculating the tax or big account fees.
Thanks for the advice mellor

I suppose it's the same? You wait until you cash out any of it, then apply income tax to that? Would love to know as I was lucky enough to get a new GPU cheap and work have ordered me a new PC too so I'll be doing a lot of mining for the rest of the year.

Mellor

studdlymurphy wrote: »

Thank you so how do I calculate it? Daily would be a huge task as the rate changes Daily or can you average per week or month? I'm not trying to cheat the tax I want to be tax compliant also don't want to be tortured calculating the tax or big account fees.
Thanks for the advice mellor

I’m sure it’s perfectly fine to average it over a given period. Just make sure it’s not costing you extra with rate fluctuations.

BOHtox

Mellor wrote: »

That’s incorrect.
Mining crypto is income. It is taxed as income tax.
Holding is CGT.

Is this the same with staking?

Mellor

BOHtox wrote: »

Is this the same with staking?

Staking isn't really clear imo.
There's a case to be made that it's generating an earning, thus income tax.
But you could also argue that it's more inline with with how bonus shares are treated - as it essential a reward for investing.

Pretty with that CGT is a lower liability than income tax, so I'd be going that justification personally.

studdlymurphy

Mellor wrote: »

I’m sure it’s perfectly fine to average it over a given period. Just make sure it’s not costing you extra with rate fluctuations.

How often would I need to pay the tax? could I sell say 50% of mined currency every month and pay tax then also?

How does others do it? if I was expecting the currency to increase in value I would prefer to hold it and then pay the tax whenever I sell if that was an option, I know CGT would also come into play on any gains.

JibJabWibWab

Mellor wrote: »

That’s incorrect.
Mining crypto is income. It is taxed as income tax.
Holding is CGT.

Mining is only income if you trade the proceeds promptly and regularly.
If you hold the proceeds you are only liable to CGT when you trade.

Mellor

studdlymurphy wrote: »

How often would I need to pay the tax? could I sell say 50% of mined currency every month and pay tax then also?

How does others do it? if I was expecting the currency to increase in value I would prefer to hold it and then pay the tax whenever I sell if that was an option, I know CGT would also come into play on any gains.

Standard income tax should be paid monthly I believe.
If the amount is under a certain threshold you can apply to make quarterly paymetns.

JibJabWibWab wrote: »

Mining is only income if you trade the proceeds promptly and regularly.
If you hold the proceeds you are only liable to CGT when you trade.

As above, this is still wrong. What OP said id correct.

Money earned "working" in income tax.
Gains made holding are CGT.
If you earn income and then hold it, both apply on the respective portions.

ie Earn 100k, hold it for 12months, trade it at 200k.
Liability is income tax on 100k, and CGT on 100k.

SlowBlowin

Where would you stand if you mined all your coin (LTC) in 2013, then resident and salaried in a different country, and now retired in Ireland, no coin ever sold (other than to invest in different coin).

Mellor

SlowBlowin wrote: »

Where would you stand if you mined all your coin (LTC) in 2013, then resident and salaried in a different country, and now retired in Ireland, no coin ever sold (other than to invest in different coin).

Mined in Ireland. Income tax in Ireland was due, however I'm not sure when the determination came in in regards to crypto being taxable.

Trading one coin to another is a "selling" for the purposes of CGT

JibJabWibWab

Mellor wrote: »

Money earned "working" in income tax.
Gains made holding are CGT.
If you earn income and then hold it, both apply on the respective portions.

ie Earn 100k, hold it for 12months, trade it at 200k.
Liability is income tax on 100k, and CGT on 100k.

This is completely incorrect.

You cannot be taxed on the same asset twice.

SnuggyBear

This is confusing. If you mine all year and cash out to euro at the end of the year do you pay income tax, cgt or both?

Can you use your Internet bill etc to deduct tax? The cgt is 33% on crypto in Ireland? That's crazy

The J Stands for Jay

JibJabWibWab wrote: »

This is completely incorrect.

You cannot be taxed on the same asset twice.

You're not being taxed on the asset twice.

You get paid for mining, and that income is taxable when received. In this case, it just so happens that it's received in the form of bitcoin. It wouldn't matter if you were paid in cheese or Vietnamese Dong.

When you sell the coin for a profit, you have made a chargeable gain, and are then charged CGT.

JibJabWibWab

Mellor wrote: »

Money earned "working" in income tax.
Gains made holding are CGT.
If you earn income and then hold it, both apply on the respective portions.

ie Earn 100k, hold it for 12months, trade it at 200k.
Liability is income tax on 100k, and CGT on 100k.

Mellor is saying here that you pay income tax when you mine 100k and if it appreciates you are liable for tax on the gain too. That is incorrect.

McGaggs wrote: »

You're not being taxed on the asset twice.

You get paid for mining, and that income is taxable when received. In this case, it just so happens that it's received in the form of bitcoin. It wouldn't matter if you were paid in cheese or Vietnamese Dong.

When you sell the coin for a profit, you have made a chargeable gain, and are then charged CGT.

You don't get "paid" for mining until you trade it for something else.
If you hold the proceeds you are only liable for CGT when trade it, not before.

Mellor

JibJabWibWab wrote: »

This is completely incorrect.

You cannot be taxed on the same asset twice.

You aren't being taxed twice. They are two separate and independent systems of tax.

JibJabWibWab wrote: »

Mellor is saying here that you pay income tax when you mine 100k and if it appreciates you are liable for tax on the gain too. That is incorrect.

Earnings are liable for income tax.
Capital gains are liable for CGT.

What part of that is confusing?

You don't get "paid" for mining until you trade it for something else.
If you hold the proceeds you are only liable for CGT when trade it, not before.

Of course you get paid for mining. Why do people min is not to earn BTC.
Nobody said anything about being liable to CGT before you trade.

If your employer agrees to pay you in BTC (or any currency).
You are liable for income tax on your earnings.

If you convert that BTC to EUR. No more tax liability.
If you hold the capital asset. And it appreciates, you are liable for CGT on the gain.
If it falls in value you can write off the loss.

It's exactly the same as if get get paid in EUR and convert to BTC yourself.

JibJabWibWab

Mellor wrote: »

You aren't being taxed twice. They are two separate and independent systems of tax.

I'm mining ETH. I'm holding the ETH I mine in a separate wallet. I'm going to hold this ETH for years.

You are suggesting that I should pay income tax on that ETH as I mine it and that I will also be liable for CGT on any appreciation on the ETH. That is incorrect.

I am only liable to CGT when I trade the ETH.

[Deleted User]

JibJabWibWab wrote: »

I'm mining ETH. I'm holding the ETH I mine in a separate wallet. I'm going to hold this ETH for years.

You are suggesting that I should pay income tax on that ETH as I mine it and that I will also be liable for CGT on any appreciation on the ETH. That is incorrect.

I am only liable to CGT when I trade the ETH.

They are suggesting you pay income tax on what you mine, and then CGT on any subsequent gain.
Mine €100, pay income tax on that, sell for €150, pay cgt on the €50 gain.

JibJabWibWab

Deleted User wrote: »

They are suggesting you pay income tax on what you mine, and then CGT on any subsequent gain.
Mine €100, pay income tax on that, sell for €150, pay cgt on the €50 gain.

I know what they are suggesting. They are wrong. You cannot be taxed twice on the same asset.

The J Stands for Jay

JibJabWibWab wrote: »

Mellor is saying here that you pay income tax when you mine 100k and if it appreciates you are liable for tax on the gain too. That is incorrect.

You don't get "paid" for mining until you trade it for something else.
If you hold the proceeds you are only liable for CGT when trade it, not before.

It doesn't matter what you receive in payment, it is considered income and is taxable. If you run a repair business and get paid in goats, shipping containers or magic beans, you have to assess the value of those items, calculate your income based on that value and pay the appropriate income tax. Whether you hold on to them or exchange them for local fiat currency is irrelevant to you tax position.

The J Stands for Jay

JibJabWibWab wrote: »

I'm mining ETH. I'm holding the ETH I mine in a separate wallet. I'm going to hold this ETH for years.

You are suggesting that I should pay income tax on that ETH as I mine it and that I will also be liable for CGT on any appreciation on the ETH. That is incorrect.

I am only liable to CGT when I trade the ETH.

You are only liable to CGT when you trade the ETH. You are liable to income tax whenever you receive the ETH from mining

The J Stands for Jay

JibJabWibWab wrote: »

I know what they are suggesting. They are wrong. You cannot be taxed twice on the same asset.

Very naïve to believe that you can't be taxed twice on the same asset. Our government tax us on some taxes.

Anyway, you are wrong in saying everyone else is wrong. Especially when 'everyone else' includes the revenue commissioners.

JibJabWibWab

McGaggs wrote: »

Very naïve to believe that you can't be taxed twice on the same asset. Our government tax us on some taxes.

Anyway, you are wrong in saying everyone else is wrong. Especially when 'everyone else' includes the revenue commissioners.

I didn't say "everyone else is wrong". You are wrong and Mellor is wrong. You cannot be taxed twice on the same asset.

The J Stands for Jay

JibJabWibWab wrote: »

I didn't say "everyone else is wrong". You are wrong and Mellor is wrong. You cannot be taxed twice on the same asset.

You're being taxed once on the income, and once on the asset. Revenue have issued ebriefs clarifying this.

https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-02/02-01-03.pdf

XVII

links with proofs would be nice in such conversations. From revenue.ie for instance.

JibJabWibWab

McGaggs wrote: »

You're being taxed once on the income, and once on the asset. Revenue have issued ebriefs clarifying this.

If you have a source please link it.

The J Stands for Jay

XVII wrote: »

links with proofs would be nice in such conversations. From revenue.ie for instance.

The burden of proof should fall on those trying to dispute the accepted facts. But anyway, proof is here https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-02/02-01-03.pdf