If you’ve engaged in cryptocurrency transactions and experienced gains or losses, the IRS requires you to report these on your tax return. Specifically, IRS Form 8949 is the document you’ll use to detail each transaction that resulted in a capital gain or loss.
Here’s how it works:
- Form 8949: This form captures the specifics of each cryptocurrency sale, including the type of asset, acquisition and sale dates, proceeds, cost basis, duration of holding (short-term vs. long-term), and the amount of gain or loss.
- Schedule D: The individual entries from Form 8949 are then summarized and reported on Schedule D, which is included with your tax return.
Who Needs to File Form 8949?
- Self-Filers: If you’re preparing your taxes yourself, you’ll need to complete a Form 8949 with all transactions that led to gains or losses.
- Tax Software Users: If you’re using tax-filing software like TurboTax or H&R Block, the software will typically generate this form for you based on the data you enter.
- Working with a CPA: If a CPA is handling your taxes, you may need to provide them with a pre-filled Form 8949, which some platforms, like Crypto Tax Report for its subscribers, offer.
In summary, anyone with cryptocurrency transactions resulting in gains or losses during the tax year needs to report these on Form 8949 and Schedule D when filing their taxes. Whether you’re doing it yourself, using software, or working with a tax professional, make sure to accurately report all your crypto activity to remain compliant with IRS regulations.
