Most people are familiar with the April 15th deadline for individual tax returns, but that’s not the only date you should have marked on your calendar. From quarterly tax payments to tax-loss harvesting deadlines, there are several important dates for taxes that crypto traders and investors should keep in mind to minimize their taxes and avoid any potential problems.
Let’s take a look at some important dates for taxes to mark on your calendar, as well as some tips to streamline your taxes this season.
Important Dates For Taxes
There are several important dates for taxes and other deadlines and due dates to keep in mind throughout the year, depending on your individual situation. For example, long-term investors don’t need to worry about paying estimated taxes each quarter while short-term traders may not need to worry about harvesting their tax losses before the end of the year.
Important Tax Dates Of 2021
January 10, 2021: Employees who work for tips, and have received tips of $20 or more in December, must report to their employer using Form 4070.
January 15, 2021: Many people file their tax returns at the last minute before the April 15th deadline, but there are several benefits to filing on January 15th (the earliest possible date). You can receive any refund earlier and put the money to work and you can accelerate the statute of limitations on prior tax returns, limiting the IRS’ ability to go back and audit your returns.
January 15, 2021, is also the deadline for estimated quarterly income tax payments for the fourth quarter of the prior year.
January 20, 2021: The IRS E-file goes live and the agency starts processing electronic and paper returns for 2020 on January 20th. If you’re waiting for a refund, you will need to wait until after this date to receive your refund, although it’s likely to take a bit longer.
January 31, 2021: Employers must send out all W-2 forms from this date and most traders will receive the forms that they need to complete their taxes. Some exchanges will send you Form 1099-K—showing your gross reportable payment—which is also sent to the IRS. You may want to wait for this information before filing your tax return to ensure that it’s accurate.
February 18, 2021: This is the deadline for individuals who have claimed exemption from income tax withholding in the previous year on Form W4, Employee's Withholding Allowance Certificate. You must file a new Form W4 by this date to continue the exemption for another year.
February 18, 2021: This is the deadline for offline submission of any other 1099 (1099-B, 1099-DIV, 1099-INT, 1099-MISC, etc.) and 1096 forms for business income. Any other business transactions that are not covered in W2 (apart from tips and wages) are covered under these documents.
For online submission, the deadline is 31st March 2021.
March 16, 2021: Corporations who use the calendar year as their tax year are eligible for a 6-month extension. It is only applicable if it is applied for by this date.
March 31, 2021: The last day for e-filing of Forms 1097, 1098, 1099 (not including 1099-NEC), 3921, 3922, and W-2GS.
April 15, 2021: The last day that you have to file your federal income tax return or request an extension, as well as the tax deadline for most state returns, is April 15th. If you’re paying estimated quarterly income taxes, you must also pay first quarter taxes by this date.
May 15, 2021: By this date, non-profit organizations must submit a Form 990 or information return. This will help the IRS assess their operations and ensure that they’re exempt from federal tax.
June 15, 2021: The second-quarter estimated income tax deadline is June 15th.
September 15, 2021: The third quarter estimated income tax deadline is September 15th.
October 1, 2021: This is the last date to set up a SIMPLE IRA (Savings Incentive Match Plan for Employees Individual Retirement Account) for the year 2021 if you’re self-employed or own a small business.
October 15, 2021: The deadline for filing extended tax returns for both federal and state taxpayers is October 15th.
December 31, 2021: The deadline for harvesting tax losses for 2021 is December 31st.
Note: These dates may be subject to change based on the impact of the COVID-19 pandemic. For example, the IRS deadline for filing 2019 taxes was pushed back to July 15, 2020, due to potential disruptions from the pandemic.
How To Simplify Your Taxes?
Income taxes can be intimidating for crypto traders and investors since you must file additional paperwork above and beyond Form 1040. In particular, crypto holders must disclose their crypto activity on Form 1040 Schedule 1 and file Form 8949 to show a record of capital gains and/or losses that are ultimately included on Form 1040 Schedule D.
The IRS treats crypto assets as property, which means that you owe tax on any capital gains. Your taxable gains are the difference between the cost basis (what you paid to acquire the asset) and the sale proceeds (how much you made from the sale). If you received crypto in an airdrop or hard fork, the cost basis may be zero (since you didn’t pay anything to acquire it), which means you may owe tax on the entire value.
While cash-to-crypto transactions are straightforward, crypto-to-crypto transactions can be a challenge. You must calculate the cost basis in U.S. dollars for each transaction, which entails looking up and reconciling the U.S. dollar price at the time of the transaction. If you had trades across multiple wallets and exchanges, it’s even more difficult to compute, since you’ll need to cross-reference the accounts to determine the cost basis.
ZenLedger automatically integrates with wallets and exchanges to compute these values and auto-fill Form 8949 and Form 1040 Schedule D. In addition, the platform can help you automatically find opportunities to harvest losses throughout the year to offset gains and lower the amount of tax that you owe (or maximize your refund).
The Bottom Line
Most people are familiar with the April 15th deadline to file individual tax returns, but there are several other important tax dates that crypto traders and investors should mark on their calendars. With ZenLedger’s done-for-you solution, you can reduce the stress on tax season and ensure that you’re paying the correct—but minimal—amount of tax each year.
If you’re interested in minimizing your Crypto Taxes and Accounting, try ZenLedger today or check out the rest of our blog or our recorded webinars for a wealth of resources on Crypto Taxes and Accounting and a wide variety of other topics.