Last updated: April 2, 2023
Are you trying to figure out your crypto taxes before the IRS deadline? Accointing by Glassnode is a crypto tax and portfolio tracking tool you can rely on to avoid any tax reporting mistakes. In this step-by-step guide, we cover everything you need to know on how to generate your crypto tax report with Accointing and what to do next.
Step 1: Connect Your Wallets and Exchanges
If you haven’t used a portfolio tracking tool to keep a record of all your transactions before, that’s okay. You can sign up for Accointing now and begin by importing all your wallets and exchanges into the platform. You can do this via API keys, a public address, or a CSV file.
Head to the “Wallets and Exchanges” tab and select the ones you want to import. Follow the instructions to connect your account, and you’ll be done in a minute. Before proceeding to the next step, select the proper tax settings based on your jurisdiction – consider the disposal and tax method.
Step 2: Review Your Transactions
After connecting your wallets and exchanges, Accointing will automatically import your transaction history. Go to the “Transactions” tab to review your transactions and ensure that everything is accurate. You have the option to add any missing transactions manually.
To calculate your cryptocurrency taxes correctly, it’s crucial to verify that the balances displayed on the platform match your real balances to guarantee the accuracy of the data imported and to ensure that no wallets or transactions are missing for the platform. This will help you avoid discrepancies and potential tax reporting errors.
Step 3: Get through the Review Steps
Next, navigate to the “Review” tab on the left-hand side of the platform. This tab contains four essential sections: “Unknown currencies,” “Identify internals,” “Classify transfers,” and “Missing funds”. They’re crucial for ensuring that your crypto portfolio is accurately tracked and organized on the platform. By going through each section, you can identify any unknown currencies, classify transfers accurately, and ensure that no funds are missing. Here is a walkthrough of the process:
Unknown currencies: This step will confirm the legitimacy and accuracy of your assets. You can choose to add unrecognized coins as new currencies or ignore them if they are potential scams. Keeping this tab organized helps optimize your tax reporting and maintain a secure portfolio.
Identify internals: The platform will automatically flag any potential internal transactions between your own wallets. Always double-check you’re uploading all your wallets to avoid unnecessary tax expenses as these types of transactions are not taxable.
Classify transfers: Review and classify any unclassified transactions manually. Classifications are labels that explain the reason or method of a transaction and directly impact how the assets are taxed. It’s crucial to understand the tax implications of your transactions and ensure that they are correctly labeled. By doing so, you can keep your crypto portfolio organized and optimized for tax reporting.
Missing funds: Find any missing funds and ensure that your portfolio is complete. If you can’t find any missing data use the “Fix for me” option to reconcile the wallet by creating deposits or withdrawals. This feature adds a reconciliation transaction to guarantee that your portfolio is accurate.
Step 4: Generate a Tax Report
Once you have finished the Review process, you can generate a tax report by going to the “Reports” tab and selecting “Tax Report.” Accointing will automatically calculate your gains and losses based on your transaction history and generate a tax report following your selected tax settings. The report will contain essential information, such as your total gains and losses, cost basis, and tax liability. With this report, you’ll have all the necessary information to file your crypto taxes accurately and efficiently.
Step 5: File Your Taxes
So, before you’re ready to file your crypto taxes, you should ensure that you’ve set the right tax settings, and reviewed your data for accuracy. If you’ve already generated your tax report and are ready to file, the following sections will guide you in submitting your 2022 US income tax return.
How to File Your Tax Return
The easiest way to file your individual tax return in the US is with a tax filing program. There are many options available to US taxpayers, but they all allow you to enter all your tax forms, including any cryptocurrency gains, losses and income, and file electronically. These tools simplify the filing process by providing easy walk-throughs and even reviewing your tax return for audit risk. We’ve prepared separate in-depth tutorials on how to file your crypto taxes with each of them.
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Filing on Your Own
If you prefer to file your taxes without using a tax tool, you can manually complete your required tax forms by using your Accointing tax report and mailing your income tax return as indicated in the IRS instructions. The IRS also offers Free File for anyone seeking to file electronically for free.
Filing with a Professional
If your crypto portfolio is large, you own any type of business or have a complicated tax situation, we recommend you find a qualified tax professional. Creating a tax report with Accointing might be simple, but there are many gray areas in the taxation of digital assets today. A tax professional can provide you with great value by helping you navigate these gray areas and plan to minimize any tax liability.
Accointing for Professionals and Partners
How to File Crypto Taxes FAQs
What are 1099 Forms?
Forms 1099 are information returns that report income received from non-employment sources, such as interest, dividends, and capital gains. These forms are issued by the brokers or payers of the income to taxpayers, who are required to report this income on their tax return. Failure to do so can result in penalties and fines. Additionally, it’s important to know that the payer is also required to file a copy of the 1099 form with the IRS, meaning that the government already has a copy of the information, so non-compliance can easily be detected. Here is a guide to Crypto Forms 1099.
The IRS is currently working on a new Form 1099-DA for digital assets, which is expected to be effective from January 2024. However, taxpayers may still receive 1099s related to their crypto income before then. To properly report each type of crypto Form 1099 for the 2023 tax year, taxpayers can refer to the following guide.
Can I Extend My Tax Return?
If you need more time to file your tax return, you can file for an extension using Form 4868 by the unextended deadline of April 18, 2023. This will extend your tax return until October 16, 2023. Keep in mind that this will only give you more time to file your return, not more time to pay any taxes due, meaning that you will have to estimate your taxes due if you do not have all the information by the unextended deadline. In such situations, it is better to overpay to avoid penalties and interest as any overpayment can be refunded or applied to next year’s taxes. Here’s our guide to Extending Your Tax Return
Can I Reduce My Crypto Taxes?
Want to reduce your tax bill for this upcoming year? Harvest losses using accointing, make sure to properly identify all internal transactions and of course HODL your assets long-term. Learn more about Accointing’s Tax Loss Harvesting Tool.
Ready to file your taxes with ease?
The information contained in this guide, including any supplemental materials, is for general information purposes and does not constitute financial, investment, legal or tax advice. The present content is not intended as a thorough, in-depth analysis, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. Please consult your tax advisor.