How To File Your Crypto Taxes At The Very Last Minute (And Be OK)
I’ll make this quick because I know you don’t have too much time: the last day to file your crypto taxes is April 17th. For reminders, all cryptocurrency is treated as “property,” and so is subject to the same capital gains taxes as any similar investment, such as real estate.
If it’ll make you feel any better, I’ll tell you that you’re not going to owe any taxes for wallet-to-wallet transfers, or for any time you purchased cryptocurrency with fiat.
You’re really only on the hook for any sales you made, or, times you exchanged crypto for fiat. How long you held that crypto effects how much taxes you’ll owe, as well as what your individual income tax bracket is.
For more answers than I am qualified to give, you may be interested in this FAQ the IRS published in August of last year, covering questions like “Does virtual currency paid by an employer as remuneration for services constitute wages for employment tax purposes?” (Yes, it does).
But long-winded answers is not what you’re here for. You need direct calls-to-action letting you know how to file your crypto taxes, or else you could be facing a serious penalty:
“If you do not pay your taxes by the tax deadline, you normally will face a failure-to-pay penalty of ½ of 1 percent of your unpaid taxes. That penalty applies for each month or part of a month after the due date and starts accruing the day after the tax-filing due date.”
Here’s the steps you can take now, since you’ve still got time, to file your cryptocurrency taxes at the last second:
Make sure you have the records for all your cryptocurrency holdings and transactions for the calendar year of 2017, in a format that can be submitted. If you made your transactions through an exchange like Coinbase, this can be done in just a few clicks by exporting a .csv with all your trades listed.
Make sure you understand what kind of taxes you owe. I recommend this Verge article, which does a great job describing the different kinds of taxes and appropriate forms. It includes this very helpful graphic:
Acquire and fill out the forms you require. Here are 4 services that claim to painlessly handle this step for you:
- CoinTaxes.com — Creates forms ready to import into tax filing services — (Reviews)
- CoinTracking.info — Free up to 100 trades — (Reviews)
- CoinTracker.io — Directly integrates with some exchanges — (Reviews)
- Bitcoin.tax — Have consultation partners — (Reviews)
File before April 17th (which is a Tuesday). Then you’re golden!
If you are unclear about the forms you need, or how certain tax rules apply to your specific situation, it is highly recommended that you talk to someone professionally qualified to give such advice. Here is a directory of CPAs who have “knowledge or experience with handling cryptocurrency taxes,” if you feel that you need an expert’s opinion.
After you’ve got your crypto taxes for 2017 squared away, you might wanna relax with some tunes:
Token Report is an independent financial information service founded by Galen Moore and Peter Vessenes. Galen is a financial journalist with a background in startups, venture capital and launching news sites. Peter is a co-founder of the Bitcoin Foundation, and launched the first VC-backed Bitcoin company in 2011. He is managing director at New Alchemy, a boutique consulting and investment group based in Seattle, Wash., that is making a pre-seed investment in Token Report.
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