How to report cryptocurrency staking rewards from Coinbase on my taxes?

Thanks for the info! If Coinbase doesn't send me a form because it's under $600, how do I find the exact amount I earned? Also, do I need to convert the crypto value to USD based on the price when I received each reward?

You can download your transaction history from Coinbase which will show all your staking rewards. Go to your Coinbase account, find the "Reports" or "Transaction History" section, and you can generate a report for the tax year. Yes, you need to use the fair market value of the crypto in USD at the time each reward was received. Coinbase actually does this calculation for you in those reports, showing both the amount of crypto and the USD value at the time of receipt. Just add up all the USD values for your staking rewards to get your total reportable income.

Does it work with other exchanges too? I have crypto on both Coinbase and Kraken with staking in both places.

How secure is connecting your exchange accounts to a third-party service? I'm always nervous about giving access to my financial accounts.

Yes, it works with pretty much all the major exchanges including Kraken, Binance, Crypto.com and many others. It pulls all your data across platforms and consolidates everything. Their security is really solid - they use read-only API connections, so they can only view your transaction history but can't move funds or make trades. They also use bank-level encryption for all your data. I was hesitant at first too but after researching their security practices I felt comfortable using it.

How does this actually work? Does it just automate the phone calling process or something? I've spent hours on hold with the IRS.

Yeah right. Nothing gets you through to the IRS faster these days. I've tried everything including calling right when they open and still waited 2+ hours. How could this possibly work?

It uses an automated system that navigates the IRS phone tree and waits on hold for you. When an actual agent picks up, you get a call connecting you directly to them. It essentially does the waiting for you so you don't have to sit there listening to the hold music for hours. I was actually really surprised too. I figured it wouldn't work any better than just calling myself, but the difference is they have technology that keeps your place in line without you being on the phone. I think they might also call from multiple lines simultaneously to increase chances of getting through faster, but I'm not 100% sure how that part works.

Do you have any sources on this? Would love to read more about the different treatments across blockchains. I'm getting ETH staking rewards and am confused if they're treated differently than my ALGO rewards.

The main case to follow is Jarrett v. United States, which specifically involves Tezos staking. The taxpayer argued that creating new blocks (and receiving rewards) is creating property, not income, so it shouldn't be taxed until sold. The IRS initially tried to settle and refund the taxpayer, but he declined to try to get precedent set. ETH and ALGO staking work differently from a technical perspective. ETH 2.0 staking currently locks your tokens up, which some argue changes the nature of the rewards. ALGO's participation rewards used to be automatic just for holding ALGO, making them more like interest. There's no definitive guidance on different blockchain mechanisms yet. CoinTracker and Taxbit both have good blog posts explaining the nuances if you search for them.

My brother got a letter last year asking for more information about his crypto. Not a full audit, but they definitely flagged something. He had about $5k in trades and some staking. I think they're randomly checking to scare people into compliance.

This is what my tax guy told me too. He said especially for amounts under $1000, just report the total and keep the detailed records in case they ever ask. He also mentioned that staking rewards are technically subject to self-employment tax if you're doing it as a business activity, but for most casual stakers it's just other income.

Thanks, this makes it seem way less complicated than I was thinking! I was getting overwhelmed looking at all these crypto tax services but for my small amount this sounds manageable. I'll download my history and sum it up as you suggested.