IRS Reportedly Won't Tax Untraded Staked Cryptocurrency Tokens: A Win for Crypto Holders

Good news for cryptocurrency stakers! The IRS is reportedly changing its stance on taxing untraded, staked cryptocurrency tokens. This could be a significant victory for individuals and businesses involved in staking and mining activities.

For months, the crypto community has debated whether staked tokens should be taxed before they are sold or traded. The core issue is whether simply holding the tokens after staking generates taxable income.

The Inland Revenue Service has agreed not to tax unsold staked or mined crypto towns or digital assets. Taxing unrealized gains from staked tokens has been a point of contention, as it requires users to pay taxes on assets they haven't actually converted to cash.

In a win for cryptocurrency stakers and miners, the IRS has offered to refund the couple taxes paid on rewards gained but not redeemed from staking on the Tezos blockchain. This decision signals a potential shift in the IRS's approach to taxing staked crypto.

In court filings expected to be made public Thursday, the IRS declared it would refund $3,293 in income tax (plus statutory interest) to a Nashville couple who had paid taxes on their staked Tezos tokens.

This development doesn't mean all crypto activity is tax-free. Remember that Any income earned from digital asset transactions must be reported on your federal tax return. Common digital assets include: Convertible virtual currency. Staking rewards, if converted to cash or used in other transactions, are still likely to be subject to taxation.

It's crucial to stay informed about evolving IRS guidelines regarding cryptocurrency taxation. Consult with a qualified tax professional for personalized advice on your specific situation.