A Last Minute Guide to Cryptocurrency Taxes

“It’s 5 days into April and I am yet to do my taxes!” This is a true story from one of our telegram group members, who wanted to share their experience of filing cryptocurrency taxes.

Trading in 2018

It’s been a pain to trade in the bear market. Especially in cryptocurrency space, where the fundamentals don’t work (exponential negative correlation in bull or bear market). The technical analysis applies a couple of times and dumps a couple of times. Given this scenario, I was just trying to break even and realized having a ton of trades.

Taxes for 2018

Like everyone, I have been tracking my progress on portfolio apps. I never realized that it would be a shocker to find that portfolio is completely different from capital gains or losses. It’s not how much I invested minus how much I am left with! It’s much more complicated and changes from trade to trade – like the crypto to crypto ones vs crypto to fiat ones.

Capital Gains or Losses

I just figured out that cryptocurrency gains or losses are considered equivalent to property as per guidance provided by IRS in 2014. There are no significant changes mentioned by the IRS and the same stuff is being followed now. This means we need to report this as a capital gain or loss and is reported on the 8949 capital gains document.

Also, if you made money on Stocks and lost on Bitcoin, you can combine them to see a net gain or loss and report the same.

Important things

While trying various software, shopping around for a while and consolidating my documents from various sources, it has come to April, where my ass is on fire to get the taxes done quickly with just 10 days ahead of me. Some of the important things I’ve learnt here regarding crypto taxes is to have all of the following handy:

  1. Trading history from all exchanges
  2. Track of all transfers between various exchanges
  3. Any significant deposits or withdrawals
  4. Wallet addresses
  5. Track of any crypto that was sent to me by friends or family
  6. Airdrops and Hardforks

Calculate capital gain or loss

Since I had all this information now, a friend of mine suggested BearTax from Reddit and I was able to get in touch with the team and they were helpful in making me understand various taxable events and things needed. In fact, much of the above important things were mentioned by their kind support staff, who helped me consolidate everything and review all sources of deposits without any hassle.

Generating 8949 Document & Filing taxes

This was confusing as whether I should be filling this or my accountant would do. But to my surprise, BearTax was able to automatically generate 8949 capital gains document, which I just download and will be handing over to my tax preparer this weekend.

Additionally, they also provide an aggregated version on 8949, which made my tax preparer happy because he don’t have to deal with 200 pages PDF. This file is aggregated by coin and have one entry for each coin, thus making it easy to read and submit.

Also, provides an export to TurboTax Online and TaxAct. I’ve not used them personally, but support staff has mentioned that you can just download the CSV and import on Turbotax Online. It must be very easy for those doing it in TurboTax. I have been doing it with a preparer and hence went ahead with it.

Conclusion

Procrastinating till the last moment sounds exciting for kids, but gets too risky when you are at a certain stage. Don’t do this mistake and increase your risk of missing out something and paying huge penalties amending them.

I wanted to put together this information which helped me file taxes in the last minute having stock investments, trading cryptocurrency and my W2s.

Plan ahead and stay ahead!

Disclaimer

As mentioned earlier, this is an article by one of our telegram group members, who wanted to share their experience. We do not encourage procrastination and we would advise you to consolidate all the necessary information and file taxes early to avoid any last minute surprises or unwanted penalties.

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