Blog updated March 2022
If your cryptocurrency activity this past year included any taxable event, it’s important that you are tracking your activity properly and have the necessary documents when you file. If you’re not sure about which activities are taxable events, check out our blog on taxable cryptocurrency activity here.
Tax Documents for Cryptocurrency Investors
Be sure to check the tax center of your exchange(s) for any and all tax documentation available. However, do not rely solely on the cryptocurrency exchange to provide you with any documentation. As of right now, cryptocurrency exchanges are not required to provide the exact tax documentation you need to properly report your cryptocurrency transactions, but many provide at least some form of documentation. If you have never moved coins between exchanges (centralized or decentralized) the exchange documentation is likely sufficient. If you move coins between exchanges, it is likely the exchange you sell on will not be able to determine original basis.
Cryptocurrency Tracking Options
There are a few options in tracking your activity, including online software options. These tracking software options are able to connect with your wallet(s) and record the information needed to report activity accurately on your tax return. If you have a large amount of activity on multiple exchanges, the tracking software is a necessity.
Cryptocurrency Tax Forms to Know
Depending on the exchange you’re a part of and the activities you participating in, there are a number of tax documents that you’ll want to be familiar with before you file your taxes. It is extremely important that you reconcile any form or report provided to you by an exchange before reporting it to the IRS.
Here are some of the common forms exchanges may provide investors:
Form 8949 and Schedule D
- Form 8949 and Schedule D are used to report capital gains and loses for any investments, not just cryptocurrency, so you might already be familiar with these. Enter your gains and losses on form 8949 (if you receive a 1099-B from your exchange, you can use that information to fill out form 8949) and Schedule D summarizes the information.
- Form 1099-B summarizes your capital gains and losses for the year. It’ll list the date of purchase, date of sale, purchase price, sales price, and either the gain or loss for each coin. If the form 1099-B you receive doesn’t have how much you initially paid for the coin (the cost basis), take a look at your records to see what you paid. You will use the information on form 1099-B to fill out your form 8949.
- You may receive Form 1099-Misc for income related to cryptocurrency activity. The most common types of income reported are derived from staking or crypto rewards.
- The information on your 1099-Misc should generally be included on Schedule 1 as other income not subject to self-employment tax.
Corrigan Krause Can Help
Investing in cryptocurrency and NFTs can be exciting, but it’s important to make sure you’re documenting your activity properly so you’re ready come tax season. Email email@example.com to connect with one of our cryptocurrency experts for more information.