Photo Credit To Anh Thu Via Flickr
A few weeks ago, the IRS sent out warning letters to those who had not filed tax returns for their crypto transactions. If you have not done so, it is still possible to file crypto tax returns. However, it can be a complex process and software like TurboTax makes it easier to do so.
Paying Taxes with the Aid of TurboTax
TurboTax wants to make it easy for those in the crypto community to remain compliant with the law. They have a system in place that allows users to import all their crypto transactions from the Coinbase exchange to TurboTax. To make it as easy as possible to calculate the tax you owe, the platform offers users various tools.
Without the aid of TurboTax, you will need to enter each transaction that is taxable manually. Depending on how active you have been on a crypto exchange, it could take you hours or days. The platform allows you to enter up to 100 transactions from Coinbase in a single instance. To do this, you only need to move a csv file into TurboTax Premier. This will help you to quickly file all your crypto transactions.
The csv file does not have any information about crypto transactions outside of Coinbase. It is this important that you verify all the information for the sake of accuracy depending on how you have interacted with the exchange.
It is also worth noting that not all crypto transactions are taxable. It is the reason why the platform has created so many useful guides to help you understand and pick transactions that are taxable while using Turbo Tax Premier. If you need further assistance, the platform allows you to connect line via video with CPAs and Enrolled Agents who have more than 15 years of average experience. They will respond to all your tax questions. The agents and CPAs can also review and file the tax returns on your behalf.
What are taxable crypto transactions?
If you converted your crypto holdings to fiat
If you sold crypto coins
If you spent crypto to pay for services and goods
If you received crypto via an airdrop or fork
Crypto events, which are not taxable:
Bought crypto that you did not sell
Gifted to a friend but the gift was below $15,000 per person
You bought crypto with a Solo 401 (k) or a Self-Directed IRA
Additionally, if your employer paid you in crypto, the IRS at the fair market value will tax you. This rule also applies to independent contractors who are compensated in crypto for their work; they have to pay a self-employment tax. Additionally, anyone who was paid for services or goods in crypto has to pay tax. Miners of crypto also have to pay tax. The fair market value has to be included in the gross income tax, which is calculated from the date the crypto was received.
With the help of tools such as TurboTax, paying taxes for your crypto activity should be quite easier. If you have not filed crypto taxes yet, the best time to do so is as soon as possible.