Cardano Staking: How to Use a Cardano Staking Tax Calculator
Staking ADA? It's vital you understand Cardano staking taxes if so. Learn how ADA rewards are taxed and how to use a Cardano staking tax calculator in our guide.
Cardano staking taxes
Do you pay taxes on Cardano staking? Yes. Cardano staking rewards are generally treated as income and subject to Income Tax upon receipt, based on the fair market value in your fiat currency. As well as this, if you later dispose of your ADA staking rewards by selling, swapping, or spending them, any profit may be subject to Capital Gains Tax.
There are some countries where staking rewards aren’t taxable in specific instances - like if you’re staking directly as part of a PoS consensus mechanism. Learn more about staking taxes in your country in our crypto tax guides.
Income Tax
In many countries, including the US, crypto staking rewards are regarded as taxable income at the time they are received in a given wallet.
So when you earn ADA through staking, the value of these rewards in USD is taxable income and should be reported as such in your tax return. The tax you’ll pay depends on your total annual income and Income Tax rate.
Read next: Crypto Staking Taxes Guide
Capital Gains Tax
If you later dispose of your Cardano staking rewards, for example, by selling, swapping, or spending them, and you make a profit as the value had increased since you received your staking rewards, you’ll be liable to pay Capital Gains Tax on this profit. The amount of tax you’ll pay depends on how long you’ve held the asset and your total annual income.
Conversely, if you disposed of your Cardano staking rewards and made a loss as the value had decreased since you received your staking rewards, this would be a capital loss and you’d be able to offset this against any gains to reduce your overall tax bill.
Read next: Where can I stake Cardano?
How to calculate Cardano staking taxes
There are two ways to calculate staking income from Cardano: with manual calculation or by utilizing a Cardano staking tax calculator like Koinly. Let’s look at both.
Manual calculation
To manually calculate your Cardano staking rewards value, there are three steps:
Export a complete history of all staking rewards transactions
Determine the fair market value of all rewards in your fiat currency on the day you received them
Tally up the values to figure out your total additional income from staking
It’s a lot of work. While tools like blockchain explorers can help you in exporting your Cardano staking reward transaction history, the most time-consuming part is figuring out the fair market value every time you received ADA tokens. As the value of ADA fluctuates regularly, like all cryptocurrencies, you’ll need to use a reliable price tracking website with historical records to go back to each date you received ADA and figure out the fair market value.
Alternatively, there’s always option two…
Use a Cardano staking tax calculator
A Cardano staking tax calculator (like Koinly!) can save you hours.
With Koinly, all you need to do is add your public Cardano address to Koinly. We’ve got steps on how to get your public address easily from all the most popular Cardano wallets.
Once you’ve added your address, Koinly will automatically import your Cardano transaction history via API, including your Cardano staking rewards. Not only that, but Koinly will calculate the fair market value of your Cardano staking rewards in your chosen fiat currency. You can see an example of how Cardano staking rewards would look below in Koinly.
Koinly also generates your free tax summary, where you can see your gains, losses, and income for the year. When it’s time to file, just upgrade to a paid plan from $49 to download your crypto tax reports to help you report your Cardano staking rewards.
Read next: What are the best Cardano wallets?
Koinly is a Cardano staking tax calculator
Koinly is a Cardano staking tax calculator that can help you quickly and easily calculate your Cardano staking rewards, according to your country’s crypto tax rules, and generate your crypto tax reports.
Best of all, Koinly’s totally free to sign up and try. You’ll only ever pay when you want to generate your crypto tax reports.
FAQs
What information do I need to calculate my Cardano staking taxes?
To calculate your Cardano staking taxes, you need to know the number of ADA received as staking rewards, their fair market value in your local currency at the time of receipt, and any costs incurred during staking.
Are Cardano staking rewards considered income or capital gains for tax purposes?
Cardano staking rewards are typically considered as income at the time they are received, and then potentially subject to Capital Gains Tax if they increase in value and are sold at a profit.
How do I determine the fair market value of my Cardano staking rewards for tax reporting?
The fair market value of your Cardano staking rewards for tax reporting can be determined using the exchange rate on a reputable cryptocurrency exchange at the time you received the rewards, or a crypto tax calculator can do this part for you.
What tax deductions can I claim related to my Cardano staking activities?
Any deductions related to Cardano staking will depend on your local tax laws; in some jurisdictions, costs associated with the operation of staking, such as hardware or electricity expenses, may be deductible.
