How exactly would the IRS know about your staking rewards if your doing it in a private wallet?

Don't get it twisted, this isn't about tax evasion but I dont know how your staking rewards could even be tracked. Its one thing to buy your crypto from the centralized apps as those exchanges either already have or will keep track having the 1099 forms sent to you and the IRS. But how exactly can amount you make offline be traced exactly?

I supposed if the amount of what ever coin sold exceeds the amount you initially bought then that would be a good indicator. But most likely you're not going to sell any coin it its entirely at once. So is this really that big of an issue that you'd have to stress about. So long as your paying your base profits from the amount your purchased.

Again this isn't me trying to advocate for evasion but its a thought that's been bothering me for a while now. Why do I need to stress myself over something that is this much of a hassle, how would calculating it even work, it's annoying that the bank rates that give you an atoms worth of return have no tax events but actual respective rates seem to fall under the need to be heavily taxed as well. Like it just disincentives me to even bother keeping track.

So any thoughts on this would be appreciated, thanks.

To further clarify, I don't understand how HODLing is a nontaxable event, but staking isn't. I haven't sold any of my unrealized gains so how exactly can I pinpoint the value of the amount i earned if the asset itself is still volatile? If I can't do that, how can I determine that amount I need to pay in taxes?