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Let me know if I'm wrong, but I don't think the IRS really has any clear guidelines on how to report Proof of Stake rewards. Some resources say to treat it as dividends or interest, but just simply stay consistent on how you treat it each year.

It's hard for me to categorize this sort of passive income in any of those groups. I guess its closest to dividends, as I am getting monthly payments at a relatively fixed rate in correlation to how much of the crypto asset I own. However, I am not being paid in USD but rather the coin itself. If I were to count this income as dividends, would I simply put down the value of the coin when I receive the staking reward?

Now, if I counted it as interest, it would be something completely different. If I let a crypto exchange do all the staking for me, then I am technically letting them take my coins and stake them. Nonetheless, I wouldn't say I am lending the asset, as I can withdraw my asset and exchange it for USD at any time.

There are stark differences between interest and dividends. I just don't know where staking rewards fit in, or if it fits in anywhere at all.

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It's simply taxable (ordinary) income from self employment converted to US dollars as of the day income was received. See more on the topic here.

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  • This answer could be improved if you quoted any particularly relevant sections from that IRS link. – Grade 'Eh' Bacon Mar 31 at 14:47
  • @Grade'Eh'Bacon Back when I wrote the answer (feels like a different era now....) I didn't have the time. Nowadays, though, I may revisit and do it... – Jack Fleeting Mar 31 at 15:40

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