This is a simplified version for creating the tax report by yourself, if you file with a tax software/your own accountant/CPA or need a more detailed explanation: The full tutorial can be found here.
1. Download Your Form 8949
After importing all your data we will automatically generate a Form 8949 for your crypto trade history to include in your tax return.
2. Understand Your Form 8949
The Form 8949 contains a summary of all gains and losses you created for the tax year. This document is the basis of your tax filling and you have to file it together with your Schedule D.
The gains are calculated by subtracting the proceeds from the cost basis. It contains two parts: The first part lists a summary of all your short-term trades and gains and the part 2 shows all the long term trades and gains.
In addition to that we provide an exception file that you can use to prove every single transaction in case the governments needs more information. (The Form 8949 is also used for stock and other assets, so you may have multiple Form 8949 files)
- Don't forget to add your name and SSN to the 8949 pages (we don't ask this from you to protect your privacy).
3. Enter Your Personal Data and Crypto Trades in the Schedule D
The Form8949 is used to report the sale or exchange of a capital asset.
Once your Form 8949 is ready you can start to complete line 1b, 2, 3, 8b, 9, or 10 of the Schedule D. You use the Schedule D to figure out the overall gain or loss from transactions reported on Form 8949 and to report transactions that can’t be included in the Form 8949.
You can also carryover a loss from one year to the next. Include your totals from your Form 8949 onto your Form Schedule D (3 and 10)
4. Enter Your Crypto Income in the Schedule 1
In certain events you might have earned crypto currencies as ordinary income instead of capital gains. Examples are income from staking, mining, or interest earned.
In the first line you can answer with “yes”. Crypto that you have earned personally (not as self-employed) have to be reported in Schedule 1 in Line 8 “Other income.”
If you run a self-employed crypto mining operation you have to report your income in Schedule C.
5. Complete Your Tax Return
Now that you have entered all your crypto currency gains, losses and income in your reporting files you can complete your returns.