How To Report Cryptocurrency On Taxes

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Cryptocurrency Taxation: Everything You Need to Know

Capital Gains vs. Ordinary Income

When you sell cryptocurrency, it may be taxed as either a capital gain or ordinary income. The tax treatment depends on how long you have held the cryptocurrency before selling it.

Reporting Cryptocurrency Transactions

You must report your cryptocurrency transactions to the IRS when you file your taxes each year. You can do this by using Form 8949, which is used to report sales and exchanges of capital assets.

Five Steps for Filing Cryptocurrency Taxes

1. Calculate your capital gains or losses.
2. Complete Form 8949, Sales and Other Dispositions of Capital Assets.
3. Attach Form 8949 to your tax return.
4. Report your cryptocurrency income on Schedule D, Form 1040.
5. Pay any taxes you owe on your cryptocurrency gains.

Conclusion

Following these steps will help you file your cryptocurrency taxes correctly and avoid any potential penalties or fines.

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