Staking on Kraken can produce a steady stream of small rewards. For US taxpayers each reward has tax consequences twice: once when you receive it, and again when you later sell, swap or spend it. This guide covers how the IRS treats staking rewards, how to find them in your Kraken records, where they go on your return, and what to keep.
The rule: income when you gain dominion and control
The IRS addressed staking in Revenue Ruling 2023-14. A cash-method taxpayer who receives staking rewards includes them in gross income in the year they gain dominion and control over them, meaning the ability to sell, exchange or otherwise dispose of them.
Two points matter for Kraken users:
- Exchange staking is covered. The ruling applies the same treatment when you stake through a cryptocurrency exchange and receive additional units as rewards (Rev. Rul. 2023-14).
- The amount is fair market value at the date and time you gain dominion and control. In the ruling’s example, rewards that couldn’t be sold until a later date were income on that later date.
For most Kraken staking, that’s when the reward is credited and available in your account, valued in US dollars at that moment.
Example. Kraken credits you 0.01 ETH as a reward while ETH trades at $3,000. That’s $30 of ordinary income. A hundred rewards across the year means adding up the dollar value of each one.
The IRS digital assets page and its virtual currency FAQs confirm that digital assets received as income are valued at fair market value in US dollars when received.
Your cost basis equals the income you reported
The dollar amount you report as income becomes your cost basis in those coins (IRS FAQs). That prevents double taxation: when you later sell, you have a capital gain or loss equal to the difference between what you receive and that basis, reported on Form 8949.
Continuing the example: you sell that 0.01 ETH for $35 in November. Basis is $30, so you have a $5 capital gain. Sell for $25 and it’s a $5 loss. Short-term vs long-term depends on how long you held the coins after receiving them. Every reward is its own tax lot with its own date and basis.
Finding staking rewards in your Kraken export
The Ledgers export is the complete record, because it captures every balance change, not just trades. Per Kraken Support: open Documents, click Create Export, choose Ledgers, set start and end dates, choose CSV, then Generate. Exports can take minutes up to a week, and Kraken doesn’t email you when it’s ready.
Kraken’s guide to ledger fields lists the columns (txid, time in UTC, type, subtype, asset, amount, fee, balance). For staking:
- Rows of type staking or earn relate to staking activity.
- The reward subtype marks the payouts: these are your income events.
- Allocation and spot-to-staking transfer subtypes move coins you already own between balances. They are not income.
A practical filter: keep reward rows, drop allocation and transfer rows, then price each reward in USD at its timestamp.
A year of staking can produce hundreds of reward rows, which is why many people use software that reads the Kraken ledger and prices each reward automatically. CoinLedger and Koinly both import Kraken by API or CSV (compared in Koinly vs CoinLedger for Kraken users). CoinLedger code CRYPTOTAX10 takes 10% off. We earn a commission if you sign up through these links.
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Where it goes on your return
- Most individual stakers: Schedule 1. The IRS says to report income from staking on Form 1040 Schedule 1, Additional Income (IRS). Schedule 1 has a line for digital assets received as ordinary income; check the current year’s form for the line number.
- If staking is a trade or business: Schedule C, where it’s also subject to self-employment tax (IRS FAQs). Whether it’s a business depends on your facts.
- Later sales: Form 8949 and Schedule D, using the income amount as basis.
Recordkeeping
The IRS says to keep records of receipts, sales, exchanges and other dispositions, and their fair market value (IRS FAQs). For Kraken staking, keep:
- Each year’s Ledgers CSV, saved at the time rather than regenerated later.
- A reward schedule: time (UTC), asset, units, USD price, USD income.
- Your pricing source, used consistently.
- Lot records for rewarded coins, so later sales use the right basis and holding period.
Kraken timestamps are UTC, which matters for rewards near midnight on December 31.
Recap
- Kraken staking rewards are ordinary income at fair market value when you gain dominion and control (Rev. Rul. 2023-14).
- That amount becomes your cost basis; later sales are capital gains or losses.
- Find rewards in the Kraken Ledgers export under the reward subtype.
- Report on Schedule 1 in most cases, Schedule C if it’s a business.
Not tax advice. General information only; consult a qualified tax professional about your situation.
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