Dear User, please note that this website has been discontinued and will therefore no longer be serviced. All current information about our software and products can be found at www.blockpit.io

Defi And Taxes – Lending

defi lending

The taxpayer must identify whether they are a hobby or (self-employed) business lender for tax reporting purposes.

To report ordinary income from lending as a hobby, the taxpayer will report the amount received as other income (Line 21) on Schedule 1- Additional Income and Adjustments to Income.

If the taxpayer is deemed to be engaged in a trade or business for which cryptocurrency lending generates trade or business income, the taxpayer must report any income or rewards received as self-employment income. Expenses related to the lending business activity like office, operating and other expenses may be deducted for tax purposes. Business lenders are also subject to self-employment tax at a rate of 15.3%. To report business income from lending, the taxpayer will report the amount received as self-employment income and any related lending business expenses on various forms.

For detailed information on tax reporting of lending and applicable forms, please check our full article DeFi Taxes – Lending and Borrowing.