Staking Rewards Are Taxed!

The highly anticipated Eth upgrade is just around the corner, and we can't wait to receive our staking rewards.

BUT hold on tight, you need to keep in mind: tax implications for staked crypto. Here is a breakdown of what you need to know:

Staking rewards are considered taxable income and are taxed as ordinary income at the time of receipt. However, in the case of locked Ethereum, the time of receipt is a gray area.

Regardless, it's essential to report the fair market value of the cryptocurrency at the time of receipt, considering the continuous fluctuation of ETH's value.

The moment you have dominion and control over the token, the cryptocurrency is deemed "received." However, since Ethereum 2.0 has been locked, it's possible to argue that you had no dominion and control over your staking rewards until they were unlocked.

Reporting your rewards while they're still locked comes with several benefits. Firstly, the value of ETH could increase after the Shanghai upgrade, potentially raising the amount of taxable income you'll need to claim. Secondly, selling, converting, or disposing of your ETH creates a capital gain or loss. Holding onto the asset for more than a year qualifies as a long-term gain, which comes with more favorable tax rates.

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