Things To Keep In Mind When Filing Crypto Tax

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    When filing your crypto taxes, there are some important things you should keep in mind. While the IRS is still figuring out how to handle cryptocurrency, these tips can help you avoid any potential problems.

    1. Be sure to file on the right form – The form that applies to your type of income on Coinbase is Form 8938, which is for reporting tax on crypto for a year during which the aggregate value of those digital currencies exceeded $20,000.
    2. File your taxes as soon as possible – If you made money from cryptocurrencies during 2018, file by April 15th 2019 and report any gains or losses from selling or buying cryptocurrencies between January 1st 2018 and December 31st 2018. 
    3. Report all your income – If you made a profit (or loss) from owning cryptocurrencies, such as Bitcoin or Ethereum, report that to the IRS in your tax return on Form 1040.
    4. Keep track of any gains and losses – Make sure you keep close tabs on any gains or losses from when you purchased your coins to when you sold them for the first time, as well as between sells if you had multiple sales. 
    5. Be sure to include exchanges in your portfolio – You should include the exchange platform where the cryptocurrency was purchased or sold in the appropriate tax form.
    6. Keep records of your transactions – If you made any trades, keep notes on what was bought/sold for how much, as well as when the sale/purchase took place. If you’re selling a crypto-asset that isn’t a crypto coin but rather something like an ERC20 token (like OmiseGO), then keep records of the sale on Ethereum’s public block explorer along with any Ether received. 
    7. Don’t try to minimise your gains and losses – The IRS wants to know all your actual income, not just what you think you’re supposed to report. Report what you made. No matter how much. 
    8. Don’t use a tax advisor – You can’t use an advisor to help you with your taxes if your crypto assets are worth more than $600,000, so if your cryptocurrency is worth more than that, then fill out the appropriate forms and file by yourself. 
    9. Avoid any wash sales – If you sell one crypto asset for another crypto-asset, be sure to report the sale in the appropriate tax form and make sure you exclude any prior profits from cryptocurrency. You can use a crypto portfolio tracking software which will keep the report of your transaction.
    10. Keep track of your coin burn – If you used coins to pay for something, record the date and what the coins were used for. 
    11. Use a mobile wallet – While this isn’t an absolute must, if you’re not tech-savvy, it’s definitely recommended you use one because it makes tracking transactions a lot easier than any other method. While this is not an exhaustive list of tips when filing crypto taxes, these are some capital-T ones to get you started in the right direction.

    Conclusion 

    As crypto taxes are new and untested by the IRS, don’t expect them to make any changes to how they treat cryptos in your taxes anytime soon. But while they figure it out, this guide can hopefully help you avoid any potential problems. Due to not that much compliance in crypto tax filing the tax on your own can be quite difficult for an individual. For this you can use a crypto tax software like Binocs which will automatically calculate and file your tax on the correct time.

     

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