How Is Kentucky Offering Tax Breaks For Crypto Miners IN 2021?
The cryptocurrency tax laws, are known to have been historically complex for cryptocurrency investors, miners and traders. There haven’t been many legislations that are entirely dedicated to the cryptocurrency mining businesses. Several issues regarding the earnings, investments, savings, and taxation of the cryptocurrency mining industry haven’t been addressed by lawmakers in extensive detail.
However, things are now gradually changing and US lawmakers are trying to improve the legislation associated with the cryptocurrency tax and cryptocurrency mining businesses. In this brief article, we’ll take a look at how cryptocurrency earnings have been traditionally taxed so far. We’ll also discuss the new cryptocurrency tax breaks that have been legislated by the State of Kentucky and what is the driving force behind the new law.
General Tax Laws For Crypto Mining Earners
The cryptocurrency earnings have been classified and taxed as property. While these rules are easy to understand and follow due to their common practice, they haven’t been able to address some key issues regarding cryptocurrency mining.
In general, all expenses associated with a cryptocurrency mining operation including electric, hardware, software, wages, etc. are tax deductible.
Tax Breaks Offered By The State Of Kentucky
The state of Kentucky is giving tax breaks to cryptocurrency miners. According to a recently signed bill, cryptocurrency miners can get tax exemptions by investing at least 1 million dollars into the cooling systems of their plants. These cooling systems are integral to cutting down the energy utilization of cryptocurrency mining plants. This is a great opportunity to get additional tax benefits for investments into cryptocurrency mining operations.
You can expect further changes to various other taxation laws relating to cryptocurrency taxes and cryptocurrency mining.
Taxpayers should very carefully consider all the cryptocurrency tax factors while participating in any cryptocurrency transaction. It is important to consult with an experienced cryptocurrency CPA regarding your specific portfolio and/or business.
Here at Camuso CPA, we offer cryptocurrency tax services nationwide. Our team is highly experienced in cryptocurrency. We were the first CPA firm to accept cryptocurrency as a form of payment during 2017. Contact our team today to discuss your portfolio in detail here.