How I deal with Hive earnings, crytocurrencies and taxes

in LeoFinance2 months ago (edited)

Taxes, what a drag. How do you make sure you're doing the right thing with crypto when doing your taxes?

Sunrise flowers Playfulfoodie

I'm sure they're good for something, those taxes. They pay for social securities, all sorts of public areas upkeep, etc.. But hey, it's still no fun to hand over your hard-earned cash! Most is pretty much automatically. When you work as an employee, your employer does all the tax stuff. When you buy products in stores, you'll automatically pay taxes over your products. Gas, water, electricity? No worries, you pay your taxes to the companies and they'll take care of the rest.

Things get a little more complicated when you become your own employer. You'll have to figure out what to do with those pesky taxes on your own, or pay for someone to help you. Atleast governments have rules for this, so you'll figure it out eventually.

Then came cryptocurrencies. What the heck are we all supposed to do with those?

I remember when I started in the cryptosphere, back in 2017 when I joined Steemit. Our government here in the Netherlands didn't have much to say about cryptos back then and the only real rule I could find was that you had to write down the value in Euro of your cryptocurrency holdings at the first of january. That would be counted up with whatever other money (saving accounts, or stock values, etc.) you had that day and if it went over a certain amount, you had to pay taxes over that.

That was simple enough, so I made sure to screenshot every crypto holding I had on every first day of the year.

I didn't think much more of it. It's not like I was making loads of money by blogging anyway, so I didn't really see it as a salary kind of thing. Then I got a job, left the blogging alone for a couple of years, burned myself out, quit the job and a month or two ago, I started blogging again.

This time, crypto value was up compared to 2017 and I was earning more than cents from blogging. This time, the government had issued more rules about cryptocurrencies aswell. This time, I decided the screenshots I made every first day of the year would probably not be enough.

I'm still not sure if I'm doing this correctly, but I'm trying to do the right thing, taxes-wise. Better safe than sorry, right?

Taxes over my various cryptocurrencies

So the government has some extra rules now and one of those is about being paid in crypto by your employer. Hive isn't really my employer, obviously, but to make it simple, I'm treating it as one for now.

Crypto holdings
For one, I will continue taking screenshots of all of my crypto holdings, so that I can always proof how much value is there. I use those when I do my yearly taxes.

Trading
I earn a bit of crypto and Euro by trading. I'm not really a daytrader though and mostly, I'll just hop onto the trading platform now and then to see if any of my trades have been hit and place new ones. It doesn't take much of my time and when you're not a daytrader, you don't have to anything here. Whatever I earn from trading will be visible in my yearly holdings screenshots.

Hive earnings
Now Hive is a little difficult. We post, we upvote and we basically gain Hive Power all day long through those posts and upvotes. I'm at a point where most weeks, the combined value of those post rewards and upvote rewards is more than a few Euros. I also spent a lot of my time on Hive, reading, curating, writing my own blogs. I don't know what my Hive future will hold and if my time and/or earnings will increase or decrease, but to be on the safe side, I decided to write my earnings down. So since I came back, I have done the following:

Whenever I claim my rewards, I write them down in an Excel file. I then proceed to check the current value of Hive and HBD in both bitcoin and Euro (which are the steps I take to convert if needed) and write those values down aswell. I have made a couple of calculated fields in the sheet, so that a Euro value of my claims rolls out.

On another sheet, I created a table where I can see my earnings in Euro per type, but also everything together per month and per year. This way, I'll always be able to show how much I earned in crypto, what the value was at the time of earning them (I claim atleast once a month, or more often) and what I've earned in a month or year.

Now when I do taxes next year, I can easily see how much I earned through Hive and I can write that down in the 'Earnings from other' field.

Conclusion

I don't want to get into trouble over this stuff down the line and while it's still a little confusing to me how to work with cryto when doing taxes, I'm doing the best I can. I feel this way, I'm being as fair as I can and as honest as I can.

How about you?

  • How do you include your crypto in your taxes?
  • How do you work with your Hive earnings when it comes to taxes?
  • Do you think I'm on the right track with my way of documenting, of am I missing something?

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Since I never sell anything I limit my tax liabilities I just stack the stuff and leave it there! It’s not like I need it which I am grateful for and I am not in it to trade

I only buy Bitcoin and that just gets stashed away, I think limiting your taxable events are important and secondly if you need to reduce it jusy borrow against your Bitcoin for that tax year

Yeah, I mainly just stack it aswell, but what if the prices rise up even higher and it's time to cash out a good amount to majorly lower my mortgage, for example? The bank and government will come knocking, asking how in the heck did I obtain so much money? So I try to keep everything documented as best I can.

Yeah I understand if you want to cash out you will need all that documentation! I just didn’t want to deal with all that drama so I just secure my Bitcoin and live within my means in fiat

I don’t want to see all that hard work stacking going to the govebmebt they already get enough of my fiat money

I don’t want to see all that hard work stacking going to the govebmebt they already get enough of my fiat money

Yeah, I completely understand that.

I use Koinly to keep records of my crypto that is bought via various exchanges. I even added my Steem stuff there.

I need to do that with Hive too but that's pretty complicated with all the different token amounts.

I'm keeping spreadsheets to keep track of various things but I'm still working out the best way to tackle this as it takes way too long at the moment.

It would be much easier if you only had to record buys and sells but, since every exchange from one currency to another is a taxable event and all buys are pooled it gets super complicated. Hence my use of Koinly.

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Hmm, I am favoriting that one, thank you!

Hive's different tokens are very complicated to keep track of. I haven't decided how to deal with those yet. For now, I just earn scraps with them, so I'll stick to the screenshots until that changes.

I just earn scraps with them,

Unless something changes dramatically I'm not sure HMRC (UK tax authority) will be that interested in the tokens although, having said that, my proofofbrain tokens are worth close to $2K right now. 😱

I need to get more organised I forgot to take screen shots of my wallet on June 1st.

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Wow, you've shown a lot of proof of your brains huh! Well done :D

Every individual need to pay tax on each and every earnings. Tax paid helps in building nation, health care and education facilities, improving infrastructure of country and so on...

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You're right, taxes do have their uses! It can hurt a little though ;-)

Isn't if funny that they want to tax cryptos yet they claim they do not believe it is sustainable..


Posted via proofofbrain.io

Ha, yeah that is pretty funny.

Hmmmm I might should start that too, keeping track sort of. Good idea ;)

Better safe than sorry, right? :-)

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