I have my staking machine ready with Medalla, excited about what's to come, but then the thought of taxes hit me like a freight train. I've been looking at few of the posts in the past regarding taxes, but it doesn't seem all that clear.
Few thoughts on my mind..
1) How is the income treated? Seems like the staking stack would be subject to capital gains if sold, but the staking rewards would likely be investment income or interest.. and capital gains if sold for profit later on. (taxed twice..?)
2) If it's income, does that mean you have to pay taxes on it without being able to sell the rewards for 2+ years? How are people with 64+ ETH going to pay off taxes on their own, if say, the price goes up to $4000, and stays like that? Would people have to pay at least 6k on income tax that isn't even accessible? Seems insane that high stakers would need to pay even more on their own somehow, seeing as they can't sell their ETH to cover the taxes (unless they've put aside some). This whole issue makes me think that it's better that some people only stake about 1/2-3/4 of their stack, and sell the rest for tax, which seems insane as well.
If this is the case, I feel like this should actually be added in the Launchpad as a huge warning, depending on the country you're in....
3) Are people creating a staking business? Would tax burden be a little better if this was the case? You could technically write off the staking machine, and other various costs as business expense..
4) We're about 3 months away from Mainnet. Surely somebody must've gotten some legit advice already.. Can anyone recommend legit crypto tax accountant professionals in the US if you already got some good advice?
On a related note... https://www.theblockcrypto.com/linked/73937/congress-letter-staking-taxes
I see Tezos, Cardano and such supporting the Proof of Stake Alliance, but I don't see Ethereum Foundation 🤔 Seems crucial for the staking community to get behind this, it'd solve some huge issues.