8 ms·

I’m confused, taxes only apply to profit and you can write off the expenses of the video card.

lm28469 4y ago
> you can write off the expenses of the video card. As a random person who buys a graphic card to mine coin you can deduct the card price ?
- bombcar 4y ago
  Only if you are a "business" and using it for business purposes. And the IRS has all sorts of things to detect a hobby vs a business - https://www.irs.gov/newsroom/earning-side-income-is-it-a-hobby-or-a-business https://www.irs.gov/newsroom/earning-side-income-is-it-a-hob... So for example if you build a workshop in your garage and start making fine wood items, even if you sell them it may not be a business, and count as a hobby. Usually the IRS is trying to find people with "perpetually money-losing businesses that are deducting each year" but you could get caught up in some cases.
seanmcdirmid 4y ago
They might not have known that. You’d be surprised how often people say “Taxes completely wiped out my profits becuase I didn’t realize I could deduct my expenses!” Also, in some industries, like marijuana distribution, you really can’t deduct a lot of your expenses.
- thealfreds 4y ago
  If it was with a single card there probably isn't enough expense to go over the standard deduction.
  - teraflop 4y ago
    Your ability to deduct business expenses using Schedule C has nothing to do with the standard deduction. (And if you don't treat it as a business expense, you probably can't deduct it no matter what.)
  - projektfu 4y ago
    That's not how that works. For business expenses you put business income against expenses on schedule C. Only the net income is considered for taxes. Many people think they need to do something special to have a business but you don't. However, it can be a good idea to create a free EIN for the business and maintain real books (using ledger, for example, or by hand) and a separate checking account.
- benj111 4y ago
  Why not? I assume we're talking legal distribution else you wouldn't be paying taxes anyway
  - CrazyStat 4y ago
    > else you wouldn't be paying taxes anyway That's how they get you. NC sells "unauthorized substance" tax stamps, which you can buy (in theory) anonymously with cash, to pay your taxes on income from illegal distribution. Mostly it's an excuse to extract money from people who (obviously) didn't pay their drug taxes [1]. [1] https://ncpolicywatch.com/2021/06/28/the-nc-drug-tax-is-designed-to-ensnare-and-penalize-people-especially-those-of-color/ https://ncpolicywatch.com/2021/06/28/the-nc-drug-tax-is-desi...
    - mschuster91 4y ago
      Seriously, there should be a way of challenging a conviction for not paying this tax (or any other tax), if the way to pay the tax is reasonably impossible to use for an average human. I'd be fine with it if you could buy these stickers at any random store/kiosk/post office (like the tax stamps in Croatia that got phased out last year [1]), if you could mail-order them in advance, or if you could pay them online, and there was a written rule that not just makes it a misdemeanor for DoR staff to forward data, but outright poisons the whole investigation. [1] https://www.expatincroatia.com/what-is-a-tax-stamp-and-why-do-you-need-them/ https://www.expatincroatia.com/what-is-a-tax-stamp-and-why-d...
      - seanmcdirmid 4y ago
        The IRS makes it really easy to just say you owe money and pay them, without saying much about why you owe them money. So there really isn't an excuse. I assume the NC system is for state taxes, not federal. For the IRS, you just put some numbers down and they usually won't ask for specific details. Later, if you get caught, the IRS will ask if you paid your taxes, and...if you did, they won't get you for tax evasion.
  - xyzzyz 4y ago
jmalicki 4y ago
If you're not incorporated, business expenses are only deductible if they exceed 2% of AGI[0, p2], so for a hobbyist miner it is quite plausible that they can't write it off. [0] https://www.irs.gov/pub/irs-pdf/p529.pdf https://www.irs.gov/pub/irs-pdf/p529.pdf
- brudgers 4y ago
  I recommend using an accountant. I am not one. However, my understanding is that all of this might be best handled as a Sole Proprietorship and filed using Schedule C - Profit and Loss from a Business.
- Kon-Peki 4y ago
  Not tax advice If you're just some average person, no, you aren't writing off the expenses. You should just add it to Schedule 1 line 8z "Other Income" and write "crypto mining" as what it is from. If you're just some average person, the actual tax on that money is going to be something like 10-15%. You can save a lot of time and effort: If it's not profitable when you pay your taxes, it isn't profitable. It's a hobby.
- xur17 4y ago
  Not tax advice, but I'm pretty sure you can just file it under a Schedule C as business income, and then you definitely can deduct the expenses from the business income with no 2% minimum.
- dboreham 4y ago
  Quick note since it wasn't totally clear from the sibling comments that this is totally wrong. The cited document is describing a completely different kind of "deduction" for a completely different reason and has nothing at all to do with the ability to "deduct" business costs from profits. The underlying principle is that only profits from business activity are taxable, not gross income. In case anyone is wondering, the cited document discusses _unreimbursed_ _employee_ expenses. This means something like: you used your guest room as an office to perform remote work for your employer, and they didn't give you any rent for that space. In some times past you could actually pay less tax by declaring that you had rented your guest room to your employer but they hadn't paid you the rent, and so that's now a loss to you upon which you don't pay tax. This document says "nope, you can't do that any more".

> you can write off the expenses of the video card. As a random person who buys a graphic card to mine coin you can deduct the card price ?

bombcar 4y ago
Only if you are a "business" and using it for business purposes. And the IRS has all sorts of things to detect a hobby vs a business - https://www.irs.gov/newsroom/earning-side-income-is-it-a-hobby-or-a-business https://www.irs.gov/newsroom/earning-side-income-is-it-a-hob... So for example if you build a workshop in your garage and start making fine wood items, even if you sell them it may not be a business, and count as a hobby. Usually the IRS is trying to find people with "perpetually money-losing businesses that are deducting each year" but you could get caught up in some cases.

seanmcdirmid 4y ago

They might not have known that. You’d be surprised how often people say “Taxes completely wiped out my profits becuase I didn’t realize I could deduct my expenses!” Also, in some industries, like marijuana distribution, you really can’t deduct a lot of your expenses.

thealfreds 4y ago
If it was with a single card there probably isn't enough expense to go over the standard deduction.
- teraflop 4y ago
  Your ability to deduct business expenses using Schedule C has nothing to do with the standard deduction. (And if you don't treat it as a business expense, you probably can't deduct it no matter what.)
- projektfu 4y ago
  That's not how that works. For business expenses you put business income against expenses on schedule C. Only the net income is considered for taxes. Many people think they need to do something special to have a business but you don't. However, it can be a good idea to create a free EIN for the business and maintain real books (using ledger, for example, or by hand) and a separate checking account.
benj111 4y ago
Why not? I assume we're talking legal distribution else you wouldn't be paying taxes anyway
- CrazyStat 4y ago
  > else you wouldn't be paying taxes anyway That's how they get you. NC sells "unauthorized substance" tax stamps, which you can buy (in theory) anonymously with cash, to pay your taxes on income from illegal distribution. Mostly it's an excuse to extract money from people who (obviously) didn't pay their drug taxes [1]. [1] https://ncpolicywatch.com/2021/06/28/the-nc-drug-tax-is-designed-to-ensnare-and-penalize-people-especially-those-of-color/ https://ncpolicywatch.com/2021/06/28/the-nc-drug-tax-is-desi...
  - mschuster91 4y ago
    Seriously, there should be a way of challenging a conviction for not paying this tax (or any other tax), if the way to pay the tax is reasonably impossible to use for an average human. I'd be fine with it if you could buy these stickers at any random store/kiosk/post office (like the tax stamps in Croatia that got phased out last year [1]), if you could mail-order them in advance, or if you could pay them online, and there was a written rule that not just makes it a misdemeanor for DoR staff to forward data, but outright poisons the whole investigation. [1] https://www.expatincroatia.com/what-is-a-tax-stamp-and-why-do-you-need-them/ https://www.expatincroatia.com/what-is-a-tax-stamp-and-why-d...
    - seanmcdirmid 4y ago
      The IRS makes it really easy to just say you owe money and pay them, without saying much about why you owe them money. So there really isn't an excuse. I assume the NC system is for state taxes, not federal. For the IRS, you just put some numbers down and they usually won't ask for specific details. Later, if you get caught, the IRS will ask if you paid your taxes, and...if you did, they won't get you for tax evasion.
- xyzzyz 4y ago

jmalicki 4y ago

If you're not incorporated, business expenses are only deductible if they exceed 2% of AGI[0, p2], so for a hobbyist miner it is quite plausible that they can't write it off. [0] https://www.irs.gov/pub/irs-pdf/p529.pdf https://www.irs.gov/pub/irs-pdf/p529.pdf

brudgers 4y ago
I recommend using an accountant. I am not one. However, my understanding is that all of this might be best handled as a Sole Proprietorship and filed using Schedule C - Profit and Loss from a Business.
Kon-Peki 4y ago
Not tax advice If you're just some average person, no, you aren't writing off the expenses. You should just add it to Schedule 1 line 8z "Other Income" and write "crypto mining" as what it is from. If you're just some average person, the actual tax on that money is going to be something like 10-15%. You can save a lot of time and effort: If it's not profitable when you pay your taxes, it isn't profitable. It's a hobby.
xur17 4y ago
Not tax advice, but I'm pretty sure you can just file it under a Schedule C as business income, and then you definitely can deduct the expenses from the business income with no 2% minimum.
dboreham 4y ago
Quick note since it wasn't totally clear from the sibling comments that this is totally wrong. The cited document is describing a completely different kind of "deduction" for a completely different reason and has nothing at all to do with the ability to "deduct" business costs from profits. The underlying principle is that only profits from business activity are taxable, not gross income. In case anyone is wondering, the cited document discusses _unreimbursed_ _employee_ expenses. This means something like: you used your guest room as an office to perform remote work for your employer, and they didn't give you any rent for that space. In some times past you could actually pay less tax by declaring that you had rented your guest room to your employer but they hadn't paid you the rent, and so that's now a loss to you upon which you don't pay tax. This document says "nope, you can't do that any more".