Staking Income
Understanding staking rewards and tax implications
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The REST API reference, plus guides for the dashboard uploader.
Understanding staking rewards and tax implications
Staking rewards are taxable income. Here's everything you need to know about reporting them correctly.
Staking is locking up cryptocurrency to validate blockchain transactions and earn rewards.
Examples:
Staking rewards count as ordinary income in the year you receive them.
Received date: The moment the reward hits your wallet
Fair Market Value: Price of the token at receipt time
Reportable Amount: Number of tokens × Price at receipt
Date: March 15, 2025
Staking reward: 1 ETH
ETH price: $2,500
Income: $2,500
Tax impact: $2,500 is ordinary income in 2025
Your cost basis in that 1 ETH: $2,500 (starting point)
Important distinction:
| Staking Reward | Capital Gain | |
|---|---|---|
| Type | Ordinary Income | Capital Gain |
| Rate | Your tax bracket (10%-37%) | Long-term (0-20%) or short-term |
| Timing | When received | When sold |
| Cost Basis | FMV at receipt | Your adjusted basis |
Staking rewards are MORE heavily taxed than capital gains.
We flag transactions marked as:
We record:
March 15: Receive 1 ETH staking reward (price $2,500)
→ Income: $2,500 (taxed at ordinary rate)
→ Cost basis in that 1 ETH: $2,500
May 20: Receive another 1 ETH staking reward (price $2,800)
→ Income: $2,800 (taxed at ordinary rate)
→ Cost basis: $2,800
July 10: Sell both ETH at $3,000
→ Gain on first ETH: $3,000 - $2,500 = $500 (capital gain)
→ Gain on second ETH: $3,000 - $2,800 = $200 (capital gain)
→ Total: $2,500 + $2,800 income + $700 capital gains
Report staking income under "Other Income":
When you sell staked tokens:
Report all capital gains/losses from selling staked tokens.
TaxFormatter formats your export and surfaces items to review in the dashboard's AI Insights panel. It does not recompute cost basis, look up historical prices, or annotate individual rows — those calculations happen in your tax software or with your tax professional, working from the formatted CSV.
Exchange 1 shows ETH staking reward at $2,450
Exchange 2 shows ETH at $2,500 same day
Which is correct?
Solution: Use the median market price or the price on your preferred exchange. TaxFormatter uses CoinGecko historical data (conservative estimate).
Many staking services give fractional rewards:
March 15: Receive 0.0234 ETH at $2,500 = $58.50 income
March 22: Receive 0.0189 ETH at $2,510 = $47.44 income
Solution: TaxFormatter aggregates these automatically. List total income per token per month.
If you stake on multiple platforms:
Lido (liquid staking): 2 ETH rewards
Coinbase (exchange staking): 0.5 ETH rewards
Kraken (exchange staking): 0.3 ETH rewards
Total: 2.8 ETH = ordinary income
Solution: Combine all staking income in one line. TaxFormatter handles this.
Stake in Jan, hold staking rewards 1+ year
If you sell after 1 year, gains are long-term (lower rate)
If staked token drops, sell to realize loss
Offsets other staking income tax
Example: Receive $5,000 staking income, sell at $4,200 loss = net $800 income
Donating cryptocurrency to qualified charities can be deductible at FMV without capital gains tax.
✓ Staking rewards = ordinary income (taxed higher than gains)
✓ Income recognized when received (not when sold)
✓ Use FMV at receipt as cost basis
✓ Track through sale for capital gains calculation
✓ Report on Schedule 1 and Schedule D
✓ Keep the formatted CSV with your return as the source record