How to report Crypto taxes?

[Brian Connor]

Hello, I would like to know about the procedure when reporting Crypto taxes.

[Kian Hughes]

Hi, thanks for inquiring! 

At first, many traders and miners of cryptocurrencies thought that crypto is not taxed, which led to many inconveniences and confusing situations. There are important steps to follow when completing this procedure.

The first one is to calculate your gains and losses, this is done by calculating all the bills and payments that you have incurred from the mining process and subtract them from the profits that you have made.

Secondly, you need to find the correct form for reporting your cryptocurrency gains. In the US this form is provided by the IRS, and it’s labeled 8949. There are platforms that automatically track your cryptocurrency transaction history and can fill out the form automatically according to these.

If you are unsure how to do this correctly or the process is too confusing for you, there are always individuals, companies, and platforms that can do this for you for a certain fee.
 

[Wiley Dominquez]

Under U.S. tax law, bitcoin and other cryptocurrencies are classified as property and subject to capital gains taxes. But you only owe taxes when those gains are realized. Similar to trading stocks, you only need to list gains you earn from bitcoin as income when you decide to sell. A friend of mine, who is an Accountant, explained that, for example, the IRS requires that you report all sales of crypto, since cryptocurrencies are treated as property. You can use crypto losses to either offset capital losses or to deduct up to $3k from your income.

Edited April 1, 2021 by Wiley Dominquez

[GavenYmah]

Navigating crypto taxes can be a maze, indeed. I remember feeling overwhelmed when I had to report my crypto gains. Have you ever explored backdoor Roth IRA 2023? It's a strategy I stumbled upon while researching tax-efficient investment options.