How To Report Cryptocurrency On Taxes 2018

Cryptocurrency Tax Reporting: Essential Information for Taxpayers

Calculate Your Crypto Gains and Losses

To accurately report your cryptocurrency transactions, it's crucial to calculate your gains and losses. This involves tracking the purchase price, sale price, and the timing of the transactions. You can use a cryptocurrency tax software or manually calculate your gains and losses using a spreadsheet.

Get a Complete Transaction History

For accurate tax reporting, you need a complete record of your cryptocurrency transactions. This includes all purchases, sales, exchanges, and other taxable events. Many cryptocurrency exchanges provide statements or APIs that allow you to export your transaction history.

Taxation of Cryptocurrency

Capital Gains or Ordinary Income

Cryptocurrency transactions can be taxed either as capital gains or ordinary income, depending on the taxpayer's activities. If the cryptocurrency is held as an investment, gains or losses are generally taxed as capital gains. However, if the cryptocurrency is considered to be inventory or held as part of a business, gains or losses may be taxed as ordinary income.

IRS Form 8949

When you file your taxes, you'll need to report your cryptocurrency transactions on IRS Form 8949, Sales and Other Dispositions of Capital Assets. This form summarizes your gains and losses from various transactions, including cryptocurrency transactions.