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Managing Staking Transactions: Taxes and Tracking

  • How do you properly handle the transactions into and out of a staking pool?
  • Why isn’t Accointing.com tracking my staked coins?
  • How do I classify the interest I received from staking?

If you’ve ever had any of these questions relating to your staking transactions, this article is for you. In this article, we will try to answer these questions and more. We do this so that you don’t have to worry about overpaying your taxes.

Notice

This article relates to the transaction to-and-from a staking pool, as well as the interest received from staking. The process usually involves a single asset being staked and does not use a special token.

If you’re staking multiple tokens and received a token relating to the pool, like when staking in liquidity pools, you can visit that article here.

Also, if you’re staking a single token and received a token relating to the pool as well, like when staking ETH 2.0, you can visit that article here.

The Interest Received From Staking

First, we need to go over classifying the interest received from staking, which is pretty straightforward. Receiving interest from a staking pool creates a taxable event, meaning that the transaction itself becomes a taxable event as well. All you need to do is to classify the interest deposits as “Staking”. The interest paid could be of like-kind or of a separate asset.

The screenshot below shows an example of the classification of the interest transaction done properly.

Example of an interest transaction classified as staking
Example of an interest transaction classified as staking

Handling Your Staking Transactions

The best way of handling your transactions when entering/exiting a staking pool is by classifying them as internal transactions. By doing so, the coins never leave your possession. This is important for tax reasons, and for preserving the value of your portfolio.

To handle your transactions in this way, the following changes need to be made:

  1. Create a new wallet that represents the asset being staked.
  2. Make transactions into the new wallet that correspond with the transactions from your real wallet.
  3. Fix any discrepancies between the coin amounts that were created when exiting the staking pool.
  4. Classify the transactions as internal.

In the following sections, we will explain how to handle this process.

1. Creating The Staking Wallet

Go to the “Add Wallet” section of the web app to create a new wallet and give it a name that corresponds to the asset and you’re staking. Here is where we will hold the transactions made into the staking pool. In the screenshot below, you can see what that would look like if we were staking bitcoin.

Example of creating a new wallet new wallet named after the staking pool asset
Example of creating a new wallet named after the staking pool asset.

Once you click on “Create manual wallet <YOUR WALLET NAME>”, you’re finished creating the new wallet. You can close that window or click on the form to add your transactions in the next section.

2. Creating The Corresponding Transactions

Second, add the corresponding transactions to the new wallet. To do so, we need to look at the transactions in our real wallet and get the timestamp, transaction type, and coin amount. Then match up every deposit with a corresponding withdrawal and vice versa.

Let’s take the example of staking 0.5 BTC, then removing it from the pool 1 hour later. The transactions might look something like the following.

Example of the transactions into and out of a staking pool
Example of the transactions into and out of a staking pool

To match the transactions with your new staking wallet, you need to add the following transactions.

Example of the corresponding transactions in the new staking wallet
Example of the corresponding transactions in the new staking wallet

Notice the discrepancy when exiting the staking pool? The interest compounding on itself rather than creating separate transactions causes this. Next, we will learn how to fix this problem.

3. Fixing Discrepancies

If you don’t have any discrepancies between your asset to when you first entered the staking pool, then you can safely skip this section and continue on to “Classifying the Staking Transactions”.

To fix the problem in the above example, we would need to add a transaction of the discrepancy manually. That transaction would have to have a timestamp prior to the timestamp of the exiting transaction. It will also need to be classified as interest. We went over this in the previous section titled, “The Interest Received From Staking”.

The screenshot below shows what that fix would look like.

Example of the transaction fixing the discrepancy and being classified as staking
Example of the transaction fixing the discrepancy and being classified as staking

Once we fixed the discrepancies, you can classify the internal transactions.

Classifying the Staking Transactions

Finally, once you have unclassified all of your transactions that need to be reclassified as internal, you are ready to classify your new staking transactions. To classify the transactions as internal, go to the “Identify Internals” section of the review process and select the ones you want to change, and click “Approve”.

The example below shows what it looks like when transactions are ready to be classified as internal.

Example of classifying your staking transactions as internal
Example of classifying your staking transactions as internal

Once approved, your staking transactions should be complete. Also, we could now track the value of your assets if they are still in the staking pool.

Wrapping Up Your Staking Transactions

In conclusion, we have shown how to manage your staking transactions and the interest received from the staking pool properly. If you were following along with the examples, your transactions should look like the following.

Example of properly handled staking transactions
Example of properly handled staking transactions

Wir möchten dir danken, dass du ACCOINTING.com als deinen Krypto-Portfolio-Tracker gewählt hast. Wie du vielleicht schon weißt, ist das Anlegen eines Kontos zur Verfolgung deines Portfolios immer KOSTENLOS. Wenn du uns aber auch für die Erstellung von Steuerberichten nutzen möchtest und dies noch nicht getan hast, wähle einen Steuerplan, um loszulegen.


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