Reporting Crypto Trades on Your Taxes

The last two years have been an interesting ride in the world of crypto currencies. If you jumped on that train you may be looking to figure out how to properly report your crypto transactions to the IRS for your taxes. This article is intended to point you to a resource that I found to be helpful. I hope that it is also helpful to you. It is not intended to be tax advice as I am not a tax professional and I am not familiar with your crypto tax situation.

I tried a couple of the providers that offer to help you report your crypto gain and losses on your taxes and found them to be pretty good. However the prices they charge seem to fluctuate quite a bit. I ended up using CryptoTrader.tax and it really made my tax preparation a breeze. They have a very fair price structure, they handle multiple exchanges, and allow unlimited transactions. They had a simple import process and included step by step instructions.

You can start an account and import all of your transactions from your exchanges, but you will need to purchase the $39 option to see and download your crypto tax report. The good news is they do a fantastic job of matching up your buys and sells and calculating your capital gains and losses. In my case I was really not successful in my crypto investing and had a loss. However, I received a 1099-K tax document from my crypto exchange claiming only a very large amount in proceeds. Yeah, I moved a lot of money around but in the end I lost money. The problem is that the tax document doesn’t consider your cost basis. CryptoTrader.tax will help you report the correct information to the IRS.

I made trades on Binance, Coinbase and GDAX/Coinbase Pro. I had just under 1000 transactions and I was able to download the IRS form 8949 and get everything that I needed. This form only had the summary data in it and a csv file with all individual trades was included. There are several other crypto tax reports available depending on your situation. They also provide an audit trail report that lays out in detail how they match and calculate all of the data. I used taxact and I did have to convert the provided csv file with all of the transactions into a PDF in order for them to accept the file. I was able to use google drive to open the csv file in Google Sheets and download it as a PDF.

Whatever tax prep software or company you use you should be able to use the reports they produce to make your life much easier. Happy crypto tax reporting!