3 ms·

You could already do that, but generally the standard deduction is better for most people than whatever they get by itemizing.

sandworm101 5y ago
Graphics cards are selling for thousands of dollars. Small dedicated mining rigs cost upwards of 10k. It doesn't take many of those to get beyond standard deductions.
toss1 5y ago
GP could likely do it next week if he formed a business entity (Corp, LLC, etc.), which could properly take deductions from the first dollar of expense, as (s)he described. Form the company, fund it with initial capital, then spend on rigs, utilities, & currencies. Your costs are expense-able, profits are taxable, and it all goes on a Schedule C, K, or whatever, depending on your corp type. You can probably take loss-carry-forwards from loss-making years to apply against profitable years,, and you can still likely use the standard personal deduction. Absolutely check with your accountant and attny for local, state, national rules, this is not advice, just general experience. I'd also advise using a proper accountant to file your taxes. Accountants put their reputation (and even their liscence) on the line and reduces the chances of audit. I've known several people who got audited, all of them had the IRS write checks to them at the end, but it was a huge pain in the arse, and they all did their own taxes, which seems like kind of a red flag (or extra demerits in their scoring systems) to the IRS.
- xur17 5y ago
  You don't have to form a business entity. You can file as a sole proprietorship, which just means filling out a schedule c. There are some rules that you have to meet to qualify, but besides that it's just another form you fill out on your taxes.
  - toss1 5y ago
    good point, especially if you are making money so don't have to worry about the hobby issue, and aren't engaging in any activities for which you want the protection of a corporate structure.
- freeAgent 5y ago
  Unless you actually make money doing this, the IRS will consider it a hobby rather than a profession, and will not allow you any preferential tax treatment related to business expense deductions, etc. Just a heads up.
  - toss1 5y ago
    Yes, that is a risk that my accountant warned me about. But he also pointed out that it is not required to make money from Day One, and there are other criteria. IIRC, they don't have a problem until 3+ years out, and other criteria are considered, such as following business formalities (meetings, minutes, filings), segregation of funds, accounting (&yes, filing via an accountant helps), having a storefront, business cards, website, etc. Consult a qualified accountant. I'm also presuming the GP poster is intending to make money, so that would eliminate the issue.

sandworm101 5y ago

Graphics cards are selling for thousands of dollars. Small dedicated mining rigs cost upwards of 10k. It doesn't take many of those to get beyond standard deductions.

toss1 5y ago

GP could likely do it next week if he formed a business entity (Corp, LLC, etc.), which could properly take deductions from the first dollar of expense, as (s)he described. Form the company, fund it with initial capital, then spend on rigs, utilities, & currencies. Your costs are expense-able, profits are taxable, and it all goes on a Schedule C, K, or whatever, depending on your corp type. You can probably take loss-carry-forwards from loss-making years to apply against profitable years,, and you can still likely use the standard personal deduction. Absolutely check with your accountant and attny for local, state, national rules, this is not advice, just general experience. I'd also advise using a proper accountant to file your taxes. Accountants put their reputation (and even their liscence) on the line and reduces the chances of audit. I've known several people who got audited, all of them had the IRS write checks to them at the end, but it was a huge pain in the arse, and they all did their own taxes, which seems like kind of a red flag (or extra demerits in their scoring systems) to the IRS.

xur17 5y ago
You don't have to form a business entity. You can file as a sole proprietorship, which just means filling out a schedule c. There are some rules that you have to meet to qualify, but besides that it's just another form you fill out on your taxes.
- toss1 5y ago
  good point, especially if you are making money so don't have to worry about the hobby issue, and aren't engaging in any activities for which you want the protection of a corporate structure.
freeAgent 5y ago
Unless you actually make money doing this, the IRS will consider it a hobby rather than a profession, and will not allow you any preferential tax treatment related to business expense deductions, etc. Just a heads up.
- toss1 5y ago
  Yes, that is a risk that my accountant warned me about. But he also pointed out that it is not required to make money from Day One, and there are other criteria. IIRC, they don't have a problem until 3+ years out, and other criteria are considered, such as following business formalities (meetings, minutes, filings), segregation of funds, accounting (&yes, filing via an accountant helps), having a storefront, business cards, website, etc. Consult a qualified accountant. I'm also presuming the GP poster is intending to make money, so that would eliminate the issue.