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How To Report Cryptocurrency On Taxes: Crypto Income & Taxes

Learn how to report cryptocurrency on taxes with this step-by-step guide. We'll cover the forms you'll need and how to report your crypto transactions.

As you trade across exchanges and wallets, it is really hard to keep your crypto taxes and accounting accurate. We show you exactly how to report cryptocurrency on taxes with this step-by-step guide.

Reporting Crypto Taxes

Do I have to pay taxes on my crypto to crypto trades?‍

Yes, according to the IRS, you have to report, file, and pay capital gains and income tax on cryptocurrency as a virtual currency. Crypto to crypto trades is a taxable event. Many people mistakenly believe that you are only taxed when you sell your crypto for cash- but that is false.

As the popularity of digital currencies continues to soar, individuals engaged in trading across multiple exchanges and wallets often find themselves grappling with the complexities of accurate tax reporting. Beginners often wonder, “Do I have to report crypto on taxes? We understand the unique challenges faced by crypto enthusiasts like you and have developed a step-by-step guide that will demystify the process of reporting cryptocurrency on your taxes. 

Whether you’re a seasoned trader or just dipping your toes into the world of cryptocurrencies, our guide will provide you with the clarity and guidance you need on how to report crypto on taxes. 

Reporting Crypto Taxes

Do I have to pay taxes on my crypto-to-crypto trades?  ‍

Yes, as per the guidelines outlined by the IRS, reporting, filing, and paying capital gains and income tax on cryptocurrency is mandatory. Contrary to popular belief, it’s not only when you sell your crypto for cash that you become liable for taxes. In fact, every crypto-to-crypto trade is considered a taxable event. It’s crucial to dispel the misconception that tax obligations arise solely from converting your crypto back into a traditional currency like US Dollars, Euros, or Yen.

Moreover, it’s important to note that purchasing crypto with cash does not trigger a taxable event under US tax law. The cash used for the acquisition has already been taxed through some other means. However, activities such as trading one cryptocurrency for another (e.g., BTC to ETH) or participating in an Initial Coin Offering (ICO) by selling ETH to purchase XYZ tokens are indeed taxable events. Additionally, income derived from mining, staking, airdrops, and forks is also subject to taxation.

Fortunately, if you experience losses due to losing coins or falling victim to hacking incidents, you can claim them as deductions. Additionally, you have the opportunity to offset your trading gains with capital losses through a strategy known as Tax- Loss Harvesting.

Do I have to pay crypto income taxes on Stablecoins?

When you trade from a cryptocurrency to a stablecoin, it is treated as the purchase of a cryptocurrency and becomes a taxable event. From a tax perspective, stablecoins are treated similarly to popular cryptocurrencies like Bitcoin (BTC) or Ethereum (ETH). Similarly, when you sell stablecoins for cash, it is also considered a taxable event, although typically with lesser tax implications compared to other transactions.

Do I have to pay taxes on income from crypto mining, staking, forks, or airdrops?

Income can be generated through various means in the crypto world, such as receiving new cryptocurrency from interest payments, mining activities, staking, forks, or airdrops. This income is typically calculated based on the market value of the received coins at the time of receipt. Subsequently, when you sell or exchange these coins for another cryptocurrency or cash, any resulting capital gains or losses would be subject to taxation, depending on the duration of your holding period.

On the other hand, when you transfer crypto between your own accounts, such as moving funds from your Coinbase account to your Ledger wallet, it is not considered a taxable event. This type of transfer is commonly referred to as a “self transfer” and does not trigger any tax implications.

  • What You Need to Know About Crypto Mining Taxes
  • What Are Hard Forks And How Do They Impact Taxes 

Do I Have to Pay Taxes on Lost or Stolen Crypto?

In the event of losing or having your crypto stolen, there is a possibility of claiming a loss on your tax return. However, the eligibility and treatment of such losses for tax purposes depend on various factors, including the specific circumstances of the loss and the tax laws applicable in your country.

For instance, in the United States, losses resulting from theft or casualties, like a fire or natural disaster, can generally be deducted as personal losses if you itemize your deductions on your tax return. However, there are limitations on the amount of loss you can claim, and it is necessary to report the loss to the relevant authorities to qualify for the deduction.

On the other hand, if you lose access to your crypto due to a forgotten password or a misplaced private key, it may not be possible to claim a loss for tax purposes. In such cases, the crypto might be treated as abandoned property, potentially subjecting it to unclaimed property laws.

It’s important to recognize that the tax treatment of crypto losses can be intricate and can vary depending on the specific circumstances and the laws in your jurisdiction. If you have experienced a loss or had your crypto stolen, seeking guidance from a tax professional or financial advisor is advisable. They can assist you in determining the best course of action to address the situation in a manner compliant with tax regulations.

What are the IRS Crypto Tax Forms?

To ensure proper reporting of crypto transactions for tax purposes, the Internal Revenue Service (IRS) has designated specific forms that taxpayers must utilize.

For individuals, one of the most pertinent forms is Form 8949, which focuses on reporting capital gains and losses arising from the sale or exchange of capital assets, including cryptocurrency. Form 8949 requires taxpayers to provide detailed information about their crypto transactions, such as the transaction date, type and quantity of crypto involved, and the fair market value of the crypto at the time of the transaction.

In addition to Form 8949, individuals may also need to include their crypto transactions on Form 1040, the primary tax return form for individuals in the United States. This may be necessary if you have significant crypto transactions that necessitate reporting or if you have other income that must be disclosed on your tax return.

However, there’s a caveat. When filing taxes, people usually think of Form 1040 as the main form. However, many taxpayers must also attach additional forms called schedules to their federal income tax return. One of these schedules is Schedule 1 (Form 1040). It includes extra income types that are not listed on Form 1040, along with some additional adjustments to income.

The main form has limited space for common types of income, like wages and interest, but Schedule 1 is where you report other sources of income, such as wages, interests and dividends, and more. It also allows you to claim deductions that can reduce your taxable income, even if you don’t itemize deductions. By using Schedule 1, the IRS aims to simplify the main form while ensuring all income and adjustments are accurately reported. 

Other than these forms, there are a few other forms that you should know about, such as-

1. Schedule B (Form 1040): Schedule B is used to report interest and dividend income. If you earned interest or received dividends from your cryptocurrency holdings, you would report them on Schedule B.

2. Schedule C (Form 1040): If you engage in cryptocurrency mining as a business or self-employment activity, you would generally report the income and expenses on Schedule C. This form is used to report business income and is appropriate for reporting mining income and related expenses.

3. Form 8275: Form 8275 is used to disclose positions taken on a tax return that might be considered questionable or require further explanation. If you have complex or uncertain cryptocurrency transactions or want to disclose additional information related to your cryptocurrency income, you may choose to use Form 8275 for additional disclosures.

Now that we’ve covered where to report crypto on taxes, let’s get to the process.

How To Report Crypto Taxes: 5 Steps

Step 1: Gather your Crypto Trading Information

To properly report your crypto income taxes, the initial step is to gather all your transaction and trading history. While dealing with numerous transactions, wallets, and exchanges can be challenging, utilizing crypto tax software is the most accurate and convenient approach.

ZenLedger, a trusted crypto tax software, offers API connections to connect with your wallets. It supports integration with various exchanges, including Coinbase, Coinbase PRO (GDAX), Binance, Gemini, BitMex, Kucoin, and many others. This enables swift importing of your transaction history and ensures precise accounting.

To simplify the process, ZenLedger provides step-by-step instructions, making it easier for you to navigate through the reporting procedure. It allows you to load all wallet activity, including non-taxable self-transfers and trading fees. This ensures that you won’t overpay when filing your taxes. Additionally, you can import transactions using CSV (Comma-Separated Values) spreadsheets. These spreadsheets can be self-created or downloaded from exchanges and wallets, streamlining the data entry process.

Step 2: Make Accounting Adjustments

The subsequent step in reporting cryptocurrency on taxes involves reviewing your crypto transactions and making necessary adjustments. During this process, you may come across transactions that haven’t been correctly identified as self-transfers. Additionally, you might want to claim certain coins as lost, such as those lost in an Initial Coin Offering (ICO) or due to the closure of an exchange.

To cater to the needs of accountants and experienced traders, we provide the option to optimize tax returns through manual adjustments. This allows you to fine-tune your tax reporting based on specific circumstances, ensuring accurate and optimized results.

Step 3: Pick an Accounting Method

When investors sell multiple capital assets with different basis, they have the option to choose between three methods: first-in, first-out (FIFO); last-in, first-out (LIFO); highest cost, first out (HIFO). Under FIFO, the oldest assets are sold first; under LIFO, the newest assets are sold first; under HIFO the highest-cost assets are sold first.

While technically you have the choice to select the method, in the crypto-tax industry, many professionals consider FIFO to be the appropriate treatment unless you can specifically identify the exact coin being sold. If you have further inquiries, it is recommended that you consult with a tax professional for guidance.

ZenLedger’s cryptocurrency tax calculator simplifies the process by allowing you to easily understand the implications of applying either strategy.

Step 4: Calculate the Crypto Cost Basis

The cost basis of an asset is its cost to you (the amount you paid for it). Note that this includes transaction costs, meaning exchange fees should be included when determining the basis.

Bitcoin as Income: The Concept of Fair Market Value

The basis of a cryptocurrency received as income is a bit different. Since you didn’t actually pay anything, the initial basis is 0. However, you must declare the USD value of the amount received as ordinary income. For example, if you earned some bitcoins consulting and, at the time you were paid, the BTC was worth $4,000, that is your basis. Thus, your basis in cryptocurrency that was received (and reported) as income is the Fair Market Value (FMV) when you were paid.

Bitcoin Income As gifts or Inheritance

Gift recipients receive the gifter’s basis, so if a recipient receives a batch of crypto that was purchased for $1, and sells for $7,000 upon receipt, the recipient has a $6,999 gain per coin (which would likely be a capital gain). For inheritances, the recipient can elect to have a “step-up” in basis to the FMV at the time of inheritance, rather than the decedent’s purchase price.

  • Tracking Cost Basis Across Wallets & Exchanges

Step 5: File your Crypto Taxes

To ensure accurate filing and completion of your crypto taxes, it’s important to familiarize yourself with several IRS forms.

The two most commonly used forms are IRS Form 8949 and Schedule D (Form 1040). Form 8949 is designed for reporting all your crypto trades and sales. When completing this form, you should provide details such as the acquisition date of the crypto, the date of sale, the proceeds (Fair Market Value), the cost basis, and the resulting gain or loss.

Start by listing all your trades conducted within the tax year. Then, calculate the total amount at the bottom of the form. Next, transfer this total to your Form 1040 Schedule D (refer to the provided picture for reference).

Both Form 8949 and Schedule D must be included with your annual tax returns when filing.

Submitting Crypto Taxes On Income Earned As A Result Of Crypto Mining

If you mine cryptocurrency as a hobby, you will also need Form 1040 Schedule 1. You will have to include the value of the coins that you earned as a result of the mining as “other income” on line 21 of this form.

If you file it this way, it limits your ability to sign off on your expenses associated with mining, since your expenses will be subject to the 2% rule.

However, if you own a business entity to run your mining activities, you will report your capital gain or loss using Schedule C. If you do it this way, you can fully deduct your expenses related to your business. The net profit from your business is subject to income tax.

How To Report Crypto On Taxes: Foreign Crypto Exchange Tax Reporting

Do you own $10k worth of cryptocurrency on one of the most popular foreign exchanges? Binance (Malta), Kucoin (Singapore), Bitfinex (Hong Kong, China), Jaxx (Canada), and Huobi (Korea) are widely used by crypto investors in the US and abroad. If you do have (or had through the course of the year) $10,000 USD or more, you need to report that to the US Government.

According to the so-called “The Paul Manifort Rule,” holding over $10,000 USD in a foreign account or accounts at any point during the taxable year triggers a requirement to file Form 114, Report of Foreign Bank and Financial Accounts (FBAR) with the Financial Crimes Enforcement Network(FinCEN). Note that although the filing deadline is the same as the tax return, the FBAR filing is not part of the tax return and is filed separately/directly with FinCEN.

For crypto traders, this means that if your holdings at a non-US-based exchange exceed $10,000 at any given point in the year, you will need to file Form 114 with FinCEN. Further, if you have two foreign exchange accounts that each have a maximum of $5,001, then you still need to file an FBAR since the aggregate is over $10,000.

Filing Crypto Taxes: Taxes On Crypto Held In A Financial exchange, Crypto Bank Account, Crypto Managed Fund

On top of that, if you hold your cryptocurrency on a financial exchange, in a crypto bank account, or in a crypto managed fund, you may have to file a Form 8938. This form is related to the Foreign Account Tax Compliance Act (FATCA). This act was meant to facilitate financial reporting between the US and more than 110 other countries and over 300,000 foreign financial institutions.

Read more about FATCA and its requirements for US taxpayers.

Crypto Tax Extension: How To File For A Crypto Tax Extension

If you find yourself running out of time and unable to file your tax forms by the April 15th deadline, you have the option to file a 6-month extension to give yourself additional time to organize your returns. While some individuals may only require a short period of time, to complete their taxes using our software, others with complex transactions may need more time. Once you file an extension request with the IRS, you will have until October 15th to submit your tax return.

It’s important to understand that filing an extension does not exempt you from paying the taxes you owe by April 15th. The extension simply grants you extra time to manage your accounting and paperwork for the previous year. However, it is still necessary to make an estimated payment of the taxes you believe you owe by April 15th, even if you have filed an extension. Be aware of the IRS penalties for failing to file or pay the amount owed. If you have any inquiries or concerns, it is advisable to seek guidance from an accountant or tax professional who can provide specific assistance tailored to your situation.

You can use the ZenLedger.io crypto tax tool now for free to help you file your taxes or your IRS tax extension. Here’s the process:

  • Either by hand or using a tax tool such as ZenLedger, you or your tax professional will need to figure out the capital gains and losses for your crypto trades across all exchanges and wallets you used. Put this number into your total capital gains as you consider your other financial assets, such as stocks and bonds.
  • Send the IRS a check for the estimated amount before April 15th.
  • Fill out Form 4868 online or mail in a paper copy with a registered postmarked date before April 15th, just to be safe.

How ZenLedger Can Help You in Reporting Crypto Taxes

Grand Unified Accounting Report

This unique report provides accounting transparency on how to calculate your cryptocurrency taxes. You don’t have to wonder about how to file crypto taxes and accounting; ZenLedger does it all for you automatically.

Superior Customer Support

With the ongoing IRS campaign to enforce crypto tax control, it’s very important that you file your crypto taxes accurately. You don’t want to be caught unprepared or end up owing more taxes than you were expecting.

ZenLedger’s customer support can help you with more than just navigating our software. While we don’t give tax advice (you need to speak to your CPA or tax professional for that), we do know how to report crypto taxes, and we have tax professional partners to ensure our solution keeps your taxes accurate. That means we can help you save money on your taxes by providing tools to harvest a tax asset on coins when you’ve lost money or explaining the basics of how and why crypto taxes function the way they do.

We are also here to help you get the data out of your exchanges and wallets. With over 300+ integrations, we know how to get your data out, formatted, and easily uploaded. We have more than 70 support articles published, and chat support is available online during business hours to answer any questions you have.

The Bottom Line

Now that you know everything about how to report crypto on taxes, you probably don’t want to go through this process alone. We are here to help you! Sign up for ZenLedger today in order to see your tax estimate for free and stay compliant!

Disclaimer: This material has been prepared for informational purposes only, and is not intended to provide, tax, legal or financial advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction.

When you sell your crypto out to cash (US Dollars, Euro, Yen, etc) that is a taxable event.

Also note that in US tax law, when you purchase crypto with cash -that is not a taxable event. You have already been taxed to acquire that cash in some way.

A trade from one crypto to another (BTC to ETH) is a taxable event. Investing in an ICO (selling ETH to purchase XYZ) is a taxable event. Income from mining, staking, airdrops, and forks are a taxable event. When you have losses, this reduces your tax burden. You can write off losses when you lose coins or get hacked. You can also claim capital losses on your trading, this is called Tax Loss Harvesting.

‍Do I have to pay crypto income taxes on Stablecoins?

Stablecoins are not recognized by a tax authority as foreign currency. Your trade from a cryptocurrency to a stablecoin is the purchase of cryptocurrency and a taxable event. Stablecoins are treated just like BTC or ETH when considering your taxes. The sale of stablecoins to cash is also considered a taxable event- but usually without very large tax implications.

Do I have to pay taxes on income from crypto mining, staking, forks, or airdrops?

Often when you receive new crypto from interest payments, mining, staking, forks, or airdrops- this is considered income. You receive income at market value at the time of receipt of the coin and then you would pay any capital gains and losses depending on how long you hold the crypto before selling for another coin or cash.

Also, when you send crypto between accounts you own – for example from your Coinbase account to your Ledger wallet- this is not a taxable event. This is called a Self Transfer.

●  What You Need to Know About Crypto Mining Taxes

●  What Are Hard Forks And How Do They Impact Taxes 

Do I Have to Pay Taxes on Lost or Stolen Crypto?

If you lose or have your crypto stolen, you may be able to claim a loss on your tax return. However, whether or not you can claim a loss and how it will be treated for tax purposes depends on a number of factors, including the specific circumstances of the loss and the tax laws in your country.

In the United States, for example, losses resulting from theft or casualty (such as a fire or natural disaster) are generally deductible as personal losses if you itemize your deductions on your tax return. However, there are limits on how much of a loss you can claim, and the loss must be reported to the authorities in order to be deductible.

On the other hand, if you simply lose access to your crypto due to a forgotten password or a lost private key, you may not be able to claim a loss for tax purposes. In this case, the crypto may be treated as abandoned property and may be subject to unclaimed property laws.

It’s important to note that the tax treatment of crypto losses can be complex and can vary depending on the specific circumstances and the laws in your jurisdiction. If you have lost or had your crypto stolen, it’s a good idea to consult with a tax professional or financial advisor to determine how to best handle the situation for tax purposes.

What are the IRS Crypto Tax Forms?

The Internal Revenue Service (IRS) has specific forms that tax payers must use to report their crypto transactions for tax purposes.

For individuals, the most relevant form is likely to be Form 8949,which is used to report capital gains and losses from the sale or exchange of capital assets, including cryptocurrency. Form 8949 requires taxpayers to report their crypto transactions in detail, including the date of the transaction, the type and amount of crypto involved, and the fair market value of the crypto at the time of the transaction.

In addition to Form 8949, individuals may also need to report their crypto transactions on Form 1040, which is the primary tax return form for individuals in the United States. This may be necessary if you have substantial crypto transactions that need to be reported or if you have other income that needs to be reported on your tax return.

For businesses, the most relevant form is likely to be Form 4797,which is used to report the sale or other disposition of business property, including cryptocurrency. Form 4797 requires businesses to report their crypto transactions in detail, including the date of the transaction, the type and amount of crypto involved, and the fair market value of the crypto at the time of the transaction.

How To Report Crypto Taxes: 5 Steps

Step 1: Gather your Crypto Trading Information

The first step to reporting crypto income taxes is to get all of your transactions and trading history together. The easiest answer to how to report crypto on taxes(and really the only accurate way taking into account how many transactions, wallets, and exchanges you might have) is to use crypto tax software.

With ZenLedger you can use API connections to connect to your wallets. ZenLedger as a crypto tax software can talk to many exchanges including Coinbase, Coinbase PRO (GDAX), Binance, Gemini, BitMex, Kucoin, and many others exchanges. This allows for a very fast import of your transaction history and very accurate accounting.

We have step-by-step instructions for you to make this as easy as possible. This also means loading all of your wallet activity. This is so our system can see all of your non-taxable self-transfers and your trading fees-which means that you won’t overpay when you file your taxes. We can also load in transactions using simple spreadsheets, called CVS. You can create them yourself or download them from exchanges and wallets.

Step 2: Make Accounting Adjustments

The next step on how to report cryptocurrency on taxes is to review your crypto transactions and make adjustments. You may see a transaction that has not been marked as a self-transfer. Or you may want to claim some coins as lost because they were lost in an ICO or when an exchange shut down. We offer accountants and savvy traders the ability to optimize their tax returns through manual adjustments.

Step 3: Pick an Accounting Method

When investors sell multiple capital assets with differing basis, they can either choose to sell the crypto they’ve held the longest first (first-in, first-out – FIFO), or sell the newest ones first (last-in, first-out – LIFO).In theory, you can choose which method you would like to apply, however, many in the crypto-tax industry believe FIFO is the only appropriate treatment unless you can specifically identify which coin you are selling. Contact a tax professional if you have further questions.

ZenLedger’s cryptocurrency tax calculator allows you to easily see the implications of applying either strategy, so you can pick the one that works for you.

Step 4: Calculate the Crypto Cost Basis

The cost basis of an asset is its cost to you (the amount you paid for it). Note this includes transaction costs, meaning exchange fees should be included when determining the basis.

Bitcoin as Income: The Concept of Fair Market Value

The basis of a cryptocurrency received as income is a bit different. Since you didn’t actually pay anything, the initial basis is 0, however, you must declare the USD value of the amount received as ordinary income. For example, if you earned some bitcoins consulting, and at the time you were paid the BTC was worth $4,000, that is your basis. Thus, your basis in cryptocurrency that was received (and reported) as income is the Fair Market Value (FMV) when you were paid.

Bitcoin Income As gifts or Inheritance

Gift recipients receive the gifter’s basis, so if a recipient receives a batch of crypto that was purchased for $1, and sells for $7,000 upon receipt, the recipient has a $6,999 gain per coin (which would likely be a capital gain). For inheritances, the recipient can elect to have a “step-up” in basis to the FMV at the time of inheritance, rather than the decedent’s purchase price.

●       Tracking Cost Basis Across Wallets & Exchanges

Step5: File your Crypto Taxes

In order to properly file and complete your crypto taxes, you need to know about several IRS forms.

The most popular forms are IRS form 8949 and 1040 Schedule D. In Form 8949 (see the picture here below)you should include all trades and sells off your crypto along with the date when you acquired this crypto, the date when you sold it, your proceeds (Fair Market Value), cost basis and your gain or loss,

Firstly, you should list all trades you had in this tax year, and after that, you have to include the total amount at the bottom, and then transfer this amount to your form 1040 Schedule D (see the picture below).

Both IRS form 8949 and 1040 Schedule D must be filed with your annual tax returns.

Submitting Crypto Taxes On Income Earned As A Result Of Crypto Mining

If you mine cryptocurrency as a hobby, you will also need Form 1040 Schedule 1. You will have to include the value of the coins that you earned as a result of the mining as “other income” on line 21 of this form.

If you file it this way, it limits your ability to sign off your expenses associated with mining, since your expenses will be subject to the 2%rule.

However, if you own a business entity to run your mining activities, you will report your capital gain or loss using Schedule C. If you do it this way, you can fully deduct your expenses related to your business. The net profit from your business is subject to income tax.

How To Report Cryptocurrency On Taxes: Foreign Crypto Exchange Tax Reporting

Do you own $10k worth of cryptocurrency in one of the most popular foreign exchanges? Binance (Malta), Kucoin (Singapore), Bitfinex (Hong Kong, China), Jaxx (Canada), and Huobi (Korea) are widely used crypto investors in the US and abroad. If you do have (or had through the course of the year)$10,000 USD or more, you need to report that to the US Government.

According to the so-called “The Paul Manifort Rule,” holding over$10,000 USD in a foreign account or accounts at any point during the taxable year triggers a requirement to file Form 114 – Report of Foreign Bank and Financial Accounts (FBAR) with the Financial Crimes Enforcement Network(FinCEN). Note that although the filing deadline is the same as the tax return, the FBAR filing is not part of the tax return and is filed separately/directly with FinCEN.

For crypto traders, this means that if your holdings at a non-US-based exchange exceeded $10,000 at any given point of the year, you will need to file Form 114 with FinCEN. Further, if you have two foreign exchange accounts that each had a maximum of $5,001, then you still need to file an FBAR, since the aggregate is over $10,000.

Filing Crypto Taxes: Taxes On Crypto Held In A Financial exchange, Crypto Bank Account, Crypto Managed Fund

On top of that, if you hold your cryptocurrency on a Financial Exchange, in a Crypto Bank Account, or you invested in a Crypto Managed Fund, you may have to file a Form 8938. This form is related to the Foreign Account Tax Compliance Act (FATCA). This act was meant to facilitate financial reporting between the US and more than 110 other countries and over 300,000 Foreign Financial Institutions.

Read more about FATCA and its requirements for US taxpayers.

Crypto Tax Extension: How To File For A Crypto Tax Extension?

If you have run out of time and do not think you can file your tax forms by April15th, you can file a 6-month extension to get your returns in order. Some people only need 15 minutes to get their taxes down by our software, but some people have very complicated transactions and need more time. Once you file the extension request to the IRS, you will have until Oct 15th to file your tax return.

It’s important to note that filing an extension does not mean you don’t have to pay the taxes you owe on April 15th. An extension gives you more time to do your accounting and paperwork for the previous year. However, you still have to pay an estimate of what you think you owe on April 15th, even if you filed an extension. Here are the IRS penalties for not filing or not paying what you owe. If you have questions here, consult an accountant or tax professional.

You can use the ZenLedger.io crypto tax tool now for free to help you file your taxes or your extension (IRS tax extension). Here’s the process:

●       Either by hand or using a tax tool such as ZenLedger, you or your tax professional will need to figure out the capital gains/losses for your crypto trades across all exchanges and wallets you used. Put this number into your total capital gains as you consider your other financial assets such as stocks and bonds.

●       Send the IRS a check for the estimated amount before April 15th.

●       Fill out Form 4868online or mail in a paper copy with a registered postmarked date before April15th….just to be safe.

How ZenLedger Can Help You File Your Crypto Taxes

Grand Unified Accounting Report

This unique report provides accounting transparency on how to calculate your cryptocurrency taxes. You don’t have to wonder about how to file Crypto Taxes and Accounting, ZenLedger does it all for you automatically.

‍Superior Customer Support

‍With the ongoing IRS campaign to enforce crypto tax control, it’s very important that you file your Crypto Taxes accurately. You don’t want to be caught unprepared or end up owing more taxes than you were expecting.

ZenLedger’s customer support can help you with more than just navigating our software. While we don’t give tax advice (you need to speak to your CPA or tax professional for that) we do know how to report Crypto Taxes and we have tax professional partners to ensure our solution keeps your taxes accurate. That means we can help you save money on your taxes by providing tools to harvest a tax asset on coins when you’ve lost money or explaining the basics of how and why Crypto Taxes function the way they do.

We are also here to help you get the data out of your exchanges and wallets. With over300+ integrations, we know how to get your data out, formatted, and easily uploaded. We have more than 70 support articles published and chat support available online during business hours to answer any questions you have.

The Bottom Line

Now that you know everything about how to report cryptocurrency on taxes, you probably don’t want to go through this process alone. We are here to help you! Sign up for ZenLedger today in order to see your tax estimate for free and stay compliant!

Read also – How to Make Money with Cryptocurrency

FAQs: How To Report Cryptocurrency On Taxes: Crypto Income And Taxes

1. Do I have to report Cryptocurrency on taxes?

The IRS categorized crypto as a property in 2014 which requires taxpayers to report all transactions that involve virtual currency in the form of US dollars on their tax returns. Crypto holders must determine its fair market value as of the transaction date and report it on their taxes. In short, yes, you do have to report cryptocurrency on your taxes.

2. How do you report cryptocurrency on taxes?

Crypto is taxed according to your income tax bracket. This implies that if you hold the bitcoins for less than three years, the gains are called short-term capital gains and anything held for more than three years is a long-term capital gain. The capital gain clubs with your taxable income and you are then taxed on the basis of your income tax bracket.

3. How much tax do I pay on Cryptocurrency?

There are three tax rates for long-term capital gains – 0%, 15%, and 20%. The tax you would pay depends on your income bracket.

4. How much crypto do you have to report on taxes?

In most countries, you are generally required to report all cryptocurrency transactions on your taxes, regardless of the amount. There is no specific threshold for reporting cryptocurrency holdings or transactions. It is recommended to consult with a tax professional or refer to the tax regulations in your jurisdiction for specific reporting requirements.

5. How to report crypto gains on taxes?

Generally, you need to keep detailed records of your transactions and calculate the gains or losses. Then, complete the necessary tax forms and file them along with your tax return. Consult a tax professional or refer to official tax resources for accurate guidance.

Irina Barber

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