Crypto Tax Regulations United States

How to File Your Crypto Taxes with ACCOINTING.com

Accointing.com Crypto Tax Files

Files Included with your Tax Reports

Congratulations! You have downloaded your Accointing.com tax reports, what do you do with them? First, let’s take a look at the list of files included with your tax reports and understand what each file is for.

  • Accointing.com Tax Report
  • Form 8949 pdf
  • Form 8949 csv files
  • Gains and Losses csv files
  • Daily balance
  • Full data set

Accointing.com Tax Report 2021

This is your main tax report containing a summary of all tax related information for the tax year selected. It is available in both pdf and excel formats for convenience. The Tax Report contains the following sections:

  • First Page: Contains a summary of your realized gains and losses, taxable income and fees for the tax year
  • Second Page: The second page contains a summary of non-taxable transactions
  • Tax Relevant Disposals: List the full detail for your taxable sales or trades, including the transaction ID, origin, purchase date and cost of your sold asset, proceeds, fee, where the asset was disposed and gain or loss
  • Not Tax Relevant Disposals: Provides the full detail of your nontaxable disposals, the same information as your taxable disposals. Note that this gain or loss is only for your information, since the disposal is not taxable, this is not a reportable gain or loss
  • Tax Relevant Income: Provides your taxable income such as rewards, airdrops, mining, staking, interest, hard forks or similar types of income events. This income is not included in your Form 8949 as it is not reported there – you should report this under “Other Income” in Schedule 1 line 8z
  • Not Tax Relevant Income: Provides information on any nontaxable income, for example, receiving a gift. This does not have to be reported for your taxes as it is nontaxable and provided for your information only
  • Capital Gains from Margin Trading: Provides a summary of any margin trading. Please note that due to exchange data when trading with margin, we are only able to provide your profit or loss on these transactions
  • Daily Balance: Reports your balance for each wallet and exchange for each day of the tax year
  • Full Data Set: Your full data set for the tax year – every transaction is included here

Let’s take a more detailed look at your tax report page 1

  1. Summary of your portfolio value at the beginning and end of the tax year, as well as your total gains or losses for the year
  2. Taxable short-term trades or sales for the tax year – refer to your Form 8949 for the format needed to report in your tax return
  3. Taxable long-term trades or sales for the tax year – refer to your Form 8949 for the format needed to report in your tax return
  4. Taxable income such as rewards, airdrops, mining, staking, interest, hard forks or similar types of income events. This income is not included in your Form 8949 as it is not reported there – you should report this under “Other Income” in Schedule 1 line 8z
  5. Summary of any margin trading. Please note that due to exchange data when trading with margin, we are only able to provide your profit or loss on these transactions

Form 8949 PDF

The form 8949 is a form that is part of your individual tax return, Form 1040. When you enter your trading information into each tax tool, the tax tools will use this information to populate the form 8949 in your individual tax return which you are filing with the tax authorities. Please note that this only includes trades and sales, and not income generating events such as interest, staking or rewards – these are never reported on Form 8949, but Accointing.com will provide in your Tax Report, as these are taxable transactions.

Accointing.com provides a Form 8949 with all your taxable trades for the year. While this is a copy and not the official form that will ultimately be filed with your tax return, all of your taxable trades are reported with the correct information as they should be filed on the appropriate section of the Accointing.com provided Form 8949. You use this information to enter your data into your tax return or otherwise enter the totals from the provided Forms 8949 and send in the required attachments to the tax authorities. Refer to the FAQ’s – Attachments section for additional information on providing the right attachment.

Form 8949 CSV Files

The Form 8949 csv files provide the same information that the Form 8949 pdf file does, but have all the details for each trade. These files should be used as the attachment sent to the tax authorities as they contain all information required when summarizing transactions and sending an attachment. Refer to the FAQ’s – Attachments section for additional information on attachments. 

The “Exceptions” files contain additional information, however, the files not labeled as “Exception” contain the data in the exact format of Form 8949 and meet the requirements to be used as an attachment. Either of these files is fine to be used to generate the attachment.

You can also upload these files to Microsoft Excel or Google Sheets to analyze the data.

Gains and Losses CSV File

This file contains all of your gains and losses for the year, taxable or nontaxable – think of this more as an economic gains and loss output rather than a tax output. 

You can also upload this file to Microsoft Excel or Google Sheets to analyze the data.

Daily Balance

The Daily Balance csv report contains your balance by wallet for each day of the tax year. For each day of the tax year, you can find your total balance in a given wallet or exchange in USD (column C) and your balance of each coin in the exchange. Use this report to obtain information to file an FBAR, where you must report the day with the highest balance and balance (in USD) of the account on that date.

You can also upload this file to Microsoft Excel or Google Sheets to analyze the data.

Full Data Set

The Full Data Set csv report contains every transaction in your wallets / exchanges for the taxable year.  This report is helpful to trace transactions in other reports or review missing transactions for gaps in your data set.

This report includes all the detail necessary to reconstruct your crypto tax puzzle such as:

You can also upload this file to Microsoft Excel or Google Sheets to analyze the data.

Filing With TurboTax Online

Entering Gains

You can enter your gains into Turbo Tax in one of three ways:

Entering a Summarized Transaction and Providing Attachment

The easiest way to report your cryptocurrency gains and losses is to simply summarize your transactions on Form 8949. In order to do this, you will need to, at a minimum, break out your short-term from your long-term gains. Keep in mind, when providing summarized information, you must provide the IRS with an attachment containing all the details of your trades (see Attachments section). In order to do this with TurboTax online, follow the steps below:

  1. Navigate to “Investment and Savings” section
  2. Click on “Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B)”
  3. Click “Okay!” on the next screen
  4. Click “Continue”
  5. Select “Enter a different way” on the next screen
  6. In the next screen, select “Stocks, Bonds, Mutual Funds” instead of “Cryptocurrency” (this will allow you to e-file the attachment instead of mailing)
  7. The next screen will ask you for information on the brokerage that sent the 1099-B, you can use “Accointing” for this name. Leave the account number and EIN blank
  8. The next screen will ask questions about your 1099-B. The question on employee stock will be “No” as will be the question asking if these sales include other types of investments (while your trades may include coins, tokens and NFTs, these are all considered virtual currency).  You can answer the question on whether you bought every investment listed as yes, as anything received by gift or inheritance would be handled correctly through Accointing.com
  9. In the next screen, select “Sales section totals”and click continue through this and the next screen as well.
  10. Now, you need to enter your transactions – first, we are going to enter all of your short-term trades.  Select “Short-term did not receive 1099-B form”.  If you did receive a 1099-B, refer to the FAQ’s section.  Enter your proceeds as well as your cost basis of all your short-term trades. Once you are doine, click “Continue”
  11. Next, you will need to add your long-term trades.  Select “Add another sales total”
  12. You will now be back at the input screen.  Select “Long-term did not receive 1099-B form”, enter your cost and basis and click “Continue”.  If you did receive a 1099-B, refer to the FAQ’s.
  13. Once you have entered all your trades, click “Continue”
  14. Please note that you will need to provide your detailed information as an attachment.  See Attachments section for additional information:
    1. The reason we used the “Stocks, Bonds and Mutual Funds” option to enter our data is because this allows us to electronically upload the attachment.  See Attachments section for additional information on formatting the required attachment 
    2. This next screen allows you to upload your file (pdf) with your documentation

As an additional guide, you can also refer to this video created for our community on how to file your crypto taxes with TurboTax Online.

or this video created by one of our community members (@MattLong6).

Entering the full detail – importing

  1. Navigate to “Investment and Savings section”
  2. Click on “Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B)”
  3. Click “Okay!” on the next screen
  4. Click “Continue”
  5. Select “Enter a different way” on the next screen
  6. In the next screen, select “Cryptocurrency” then “Continue”
  7. In the next screen, select “Upload it from my computer” and “Continue”
  8. In the next screen, click on the drop down menu and select “Other”, then enter “Accointing” and click “Continue”
  9. Upload your CSV file in the next screen, Turbo Tax will automatically read the file and import your trades
  10. Once the import is complete, you will notice your total gain pop-up with the message that it “Needs Review”, click on “Review”.  This step is to ensure that the import worked correctly and that 0’s and 8’s, commas from periods and such are not mixed up
  11. Select the appropriate transaction range from the next page by clicking “Edit”, this will vary depending on your transaction volume
  12. Make any necessary changes in the next page by clicking on the pencil icon.  You will notice that if you click into a sale, you will have to specify how it was purchased and here you can adjust any detail.
  13. Once all your data looks correct, click “Continue”
  14. You’ll notice that the “Needs review” warning has disappeared now

Entering the full detail – manually

If you wish to enter all your gains manually, follow the steps below:

  1. Navigate to “Investment and Savings section”
  2. Click on “Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B)”
  3. Click “Okay!” on the next screen
  4. Click “Continue”
  5. Select “Enter a different way” on the next screen
  6. In the next screen, select “Cryptocurrency” then “Continue”
  7. In the next screen, select “Type it in myself” and “Continue”
  8. In the next screen enter “Accointing” as the crypto service and click “Continue”
  9. Select “No” to the question asking if you got a 1099-B. If you did receive a 1099-B, refer to the FAQ’s section.
  10. In the next screen, enter the details of your sale.  Select “Cryptocurrency” for type of investment.  Select the manner in which you received the coin or token.  Enter the quantity and ticker symbol of the coin or token traded.  Enter the date you acquired this coin and the date you sold the coin.  Enter your proceeds and cost of the asset, then click “Continue”
  11. In the next screen, select “None of these apply” as any expenses such as fees would be factored into your Accointing computed amounts.  Click “Continue”
  12. Repeat this process for as many sales as you need to enter.  Remember that if you enter a summarized transaction (see Entering a Summarized Transaction), you will need to provide the detail to the IRS as an attachment or mail it in.   See Attachments section.  If you enter all the details of your transactions, whether by csv import or manually, you do not need to provide an attachment to the IRS.

Entering Other Income

  1. Navigate to “Other Common Income” section
  2. Click on “Start” next to Form 1099-MISC
  3. The next screen will ask if you got a 1099-MISC, click “Yes”
  4. On the next screen, enter the name of the Payer exactly as it appears on your Form 1099-MISC.  Enter the payer’s EIN as provided in the 1099-MISC, then enter the income reported on the Form 1099-MISC and click “Continue”.  If your form has additional information, select the option and report as it is reported on your 1099-MISC as described in the FAQ section, form 1099-MISC.
  5. The next screen will ask for the reason why you got the 1099-MISC, enter a short description such as “staking” or “crypto rewards” then click “Continue”
  6. The next screen will ask specific questions about the Form 1099-MISC.  Read through them but most likely none will apply unless you have a special situation.  Click on “None of these apply” then click “Continue” (unless any of the above do apply)
  7. The next screen will ask if this was related to work that’s “like your main job” – unless this 1099-MISC was issued to you due to providing services to a company as a contractor (in which case you would generally receive a Form 1099-NEC), then select “No, it didn’t involve work like my main job” then select “Continue”
  8. The next screen will ask how often you have received this type of income, select whatever the case is however, for the purposes of entering a 2021 1099-MISC, just select “I got it in 2021” and click “Continue”
  9. The next screen will ask if your crypto rewards involve an intent to earn money.  If you click on the examples, you will see that “an intent to earn money”  means that  “You had an intent to earn money if you signed up for a job to make money.” While this is very vague, this question is asking whether your 1099-MISC income was originated from a trade or business with the intent of making profit.  You should generally select “No, it didn’t involve an intent to earn money” as  most 1099-MISC forms you receive for crypto income will not be due to a trade or business, but rather due to rewards earned such as staking.  Click “Continue”
  10. If you received other 1099-MISC forms, select “Yes” and repeat the process, otherwise select “No” and click  “Continue”

The steps below will show you how to enter any other crypto income that is not reported on a Form 1099-MISC.  Anything that you received a Form 1099-MISC should be separately reported in the appropriate section.  If you did not receive a Form 1099-MISC, then follow the steps below.  Please note that you do not have to separately report each category (staking, airdrops, etc) or each wallet.  You can simply report in one line, such as “various crypto income” and enter the total.

  1. Navigate to the bottom of the income section to the “Less Common Income” section
  2. Click on “Start” next to Miscellaneous Income, 1099-A, 1099-C
  3. The next screen select “Other reportable income”
  4. Select “Yes” on the next screen
  5. In the next screen, enter the description of the income and the amount.  If you did not receive any 1099-MISC forms, you can simply report the total of your “Tax Relevant Income” as “Various Crypto Income” then enter the total amount.  If you received a 1099-MISC and you had to report other income separately as 1099-MISC, only report amounts not otherwise included on your Form 1099-MISC.  Compare this example, entering all your income in one line to the last example, reporting some under 1099-MISC and spitting out the rest.  Click “Continue” once you have entered your income 

Filing With TurboTax Desktop

Entering Gains

You can enter your gains into Turbo Tax in one of three ways:

Entering a Summarized Transaction and Providing Attachment

The easiest way to report your cryptocurrency gains and losses is to simply summarize your transactions on Form 8949.  In order to do this, you will need to, at a minimum, break out your short-term from your long-term gains.   Keep in mind, when providing summarized information, you must provide the IRS an attachment with all the details of your trades (  See Attachments section) .  In order to do this with TurboTax Desktop, follow the steps below:

  1. Navigate to the “Investment Income” section
  2. Click on”Start” by “Stocks, Mutual Funds, Bonds, Other (1099-B)”
  3. The next screen will ask if you sold any investments in 2021, click “Yes”
  4. The next screen will ask if you received a 1099-B or a brokerage statement, click “No”
  5. In the next screen select “I’ll enter a summary for each sales category” after which fields to enter your data will appear – enter your total proceeds, total cost basis and select the appropriate holding period, depending on whether you are entering your short or long-term sales; once you have entered this data, click “Continue”
  6. The next screen will ask if you have additional 1099-B sales – in the example above, we entered our short-term sales so we need to repeat the above steps for our long-term sales. Answer the question accordingly and repeat the process as needed
  7. Once you have entered all your sales, select “No, Let’s see a summary of my entries” and click “Continue” after which you will be able to review and edit your entered trades
  8. Please note that you will need to provide your detailed information as an attachment.  See Attachments section for additional information

We have created this additional step by step video guide for you in case you need a more detailed overview:

Entering the full detail – importing

  1. Navigate to the File menu, then select “Import” > “From TXF Files 
  2. In the next screen choose your TXF file by clicking on the button and navigating the file’s location
  3. Once you select your file and you see it load click “Continue”
  4. The next screen will summarize the data that you are entering, click on “Import Now”
  5. Click on “Done” in the next screen once the import is complete
  6. Now we are going to verify the imported data and show how to make changes, if needed; Navigate to the “Investment Income” section and select “Update” next to  “Stocks, Mutual Funds, Bonds, Other (1099-B)”
  7. The next screen summarizes the data that has been entered – select “Edit”
  8. The next screen will prompt you to change the account or number – select “My bank/brokerage isn’t here” and then type “Accointing” as the name of the financial institution and select “Continue”
  9. The next screen will show all your individual trades imported, select “Edit” for any that you need to update information for
    • If you chose to edit a transaction, the next screen will allow you to update the description, date sold, date acquired, sales proceeds and cost basis. Click on “Continue” once you have made any necessary changes
    • The next screen will ask for information such as accrued market discount or wash sales – this will not apply for crypto trades, so simply click “Done”
    • The next screen will ask if this was a sale of employee stock – select “No” then click “Continue”
    • One more screen to select even less common adjustments – select “Continue”
  10. Repeat the process above as needed until your data looks correct; once correct, select “Done”
  11. Select “Done” once again at the next screens which will summarize the net gain or loss reported

Entering the full detail – manually

If you wish to enter all your gains manually, follow the steps below:

  1. Navigate to the “Investment Income” section
  2. Click on ”Start” by “Stocks, Mutual Funds, Bonds, Other (1099-B)”
  3. The next screen will ask if you sold any investments in 2021, click “Yes”
  4. The next screen will ask if you received a 1099-B or a brokerage statement, click “No”
  5. In the next screen select “I’ll enter one sale at a time” after which fields to enter your data will appear – enter the description of your sold asset, date sold, date acquired, sales proceeds,cost basis and select the appropriate holding period, depending on whether you are entering a short or long-term sale; once you have entered this data, click “Continue”
  6. The next screen will ask for information such as accrued market discount or wash sales – this will not apply for crypto trades, so simply click “Done”
  7. The next screen will ask if this was a sale of employee stock – select “No” then click “Continue”
  8. One more screen to select even less common adjustments – select “Continue”
  9. The next screen will ask if you have another sale not reported on a Form 1099-B, select “Yes” and repeat the process above as needed until you have entered all your sales; once correct, select ”No” to view a summary of your entries and then select “Continue” and then “Done” at the final summary screen
  10. Please note that this can be quite time-consuming, which is why we recommend entering a summarized transaction and providing an attachment with the details as explained above

Entering Other Income

  1. Navigate to “Other Common Income” section and click on “Start” next to “Income from Form 1099-MISC”
  2. The next screen will ask if you got a 1099-MISC, click “Yes”
  3. On the next screen, enter the name of the Payer exactly as it appears on your Form 1099-MISC.  Enter the payer’s EIN as provided in the 1099-MISC, then enter the income reported on the Form 1099-MISC and click “Continue”. If your form has additional information, select the option and report as it is reported on your 1099-MISC, as explained in the FAQ section, form 1099-MISC.
  4. The next screen will ask for the reason why you got the 1099-MISC, enter a short description such as “staking” or “crypto rewards” then click “Continue”
  5. The next screen will ask specific questions about the Form 1099-MISC.  Read through them but most likely none will apply unless you have a special situation. Click on “None of these apply” then click “Continue” (unless any of the above do apply)
  6. The next screen will ask if this was related to work that’s “like your main job” – unless this 1099-MISC was issued to you due to providing services to a company as a contractor (in which case you would generally receive a Form 1099-NEC), then select “No, it didn’t involve work like my main job” then select “Continue”
  7. The next screen will ask how often you have received this type of income, select whatever the case is however, for the purposes of entering a 2021 1099-MISC, just select “I got it in 2021” and click “Continue”
  8. The next screen will ask if your crypto rewards involve an  intent to earn money.  If you click on the examples, you will see that “an intent to earn money”  means that  “You had an intent to earn money if you signed up for a job to make money.” While this is very vague, this question is asking whether your 1099-MISC income was originated from a trade or business with the intent of making profit.  You should generally select “No, it didn’t involve an intent to earn money” as most 1099-MISC forms you receive for crypto income will not be due to a trade or business, but rather due to rewards earned such as staking.  Click “Continue”
  9. If you received other 1099-MISC forms, select “Yes” and repeat the process, otherwise select “No” and click  “Continue”

The steps below will show you how to enter any other crypto income that is not reported on a Form 1099-MISC.  Anything that you received a Form 1099-MISC should be separately reported in the appropriate section.  If you did not receive a Form 1099-MISC, then follow the steps below.  Please note that you do not have to separately report each category (staking, airdrops, etc) or each wallet.  You can simply report in one line such as the example below:

  • Navigate to the bottom of the income section to the “Less Common Income” section and click on “Start” next to “Miscellaneous Income, 1099-A, 1099-C”
  • In the next screen select “Other reportable income” and click on “Start / Update”
  • Select “Yes” on the next screen
  • In the next screen, enter the description of the income and the amount.  If you did not receive any 1099-MISC forms, you can simply report the total of your “Tax Relevant Income” as “Various Crypto Income” then enter the total amount.  If you received a 1099-MISC and you had to report other income separately as 1099-MISC, only report amounts not otherwise included on your Form 1099-MISC.  Compare this example, entering all your income in one line to the last example, reporting some under 1099-MISC and spitting out the rest.  Click “Continue” once you have entered your income

Filing With H&R Block

Entering Gains

You can enter your gains into H&R Block in one of two ways:

Entering a Summarized Transaction and Providing Attachment

The easiest way to report your cryptocurrency gains and losses is to simply summarize your transactions on Form 8949.  In order to do this, you will need to, at a minimum, break out your short-term from your long-term gains. Keep in mind, when providing summarized information, you must provide the IRS an attachment with all the details of your trades ( See Attachments section) . In order to do this with H&R Block, follow the steps below:

  1. In the Income section, navigate to the “Sales and Transfers” section and click “Add” next to “1099-S Sale of other real estate, collectibles, and other investment property”
  2. In the next screen, click “Start” once again by “1099-S Sale of other real estate, collectibles, and other investment property”
  3. The next screen will summarize any sales that you have entered.  For now, just click “Add Sale”
  4. The next screen will prompt you to tell H&R Block about your sale – enter a description of your sale.  In this case, since we are summarizing all of our short-term trades, we will use “Various short-term Crypto” as our description. Note that if you are reporting crypto sales, you will not need to select a type of disposition as this is unrelated to crypto. Click “Next” through this screen once your description and disposition type are correct
  5. The next screen will ask when you acquired this asset – since we are summarizing, leave the date acquired blank and pick an exception from the menu at the bottom.  In this case, we will select “Various – held short-term” then click “Next”.  If you are entering your long-term sales, select “Various – hold long-term”
  6. The next screen will ask for a date of sale and sales proceeds. It is perfectly acceptable to use 12/31/21 (the last day of the tax year) since we are entering a summarizing transaction with many disposal dates.  After you entered the date, enter your total sales proceeds (if you are entering short-term trades, enter your total proceeds for all short-term trades and vice versa if entering long-term trades) and click “Next”
  7. Enter your total cost basis (corresponding to the transactions you are entering)  in the next screen and click “Next”
  8. Now you will come back to the summary screen for this section.  If you entered your short-term trades only (like the example above), click on “Add Sale” and follow the same steps once again to enter your long-term trades
  9. Please note that you will need to provide your detailed information as an attachment.  See Attachments section for additional information

Entering the full detail

If you don’t want to include an attachment, you will have to report the full details of your trades.  

  1. In the Income section, navigate to the “Investments” section and click “Add” next to “Cryptocurrency” – this is a different menu than the one we used to enter a summarized transaction – both of these sections will show up on Form 8949, just different inputs
  2. In the next screen, click “Start” once again by “Cryptocurrency”
  3. The next screen will summarize any sales that you have entered. For now, just click “Add transaction”
  4. The next screen will prompt you to tell H&R Block about your sale – enter all applicable information for each sale.  You can use the actual exchange where the crypto was sold as the Service, or you can also list “Accointing” – there is no formal guidance here.  Keep in mind that we are entering every sale separately with this method, so you will need to include each trade’s detailed information.  Click “Next” through this screen once you have entered all required information
  5. You will be back at the summary screen for all your Cryptocurrency sales – repeat the above steps as many times as needed until you have entered all your transactions. Please note that this can be quite time-consuming, which is why we recommend entering a summarized transaction and providing an attachment with the details as explained above

Check out this walkthrough video guide if you’re looking for a more detailed view:

Entering Other Income

  1. Navigate to the “Less Common Income” section and click “Add” next to “1099-MISC Box 3 income from a one-time event or hobby”
  2. Click on “Start” next to “1099-MISC Box 3 income from a one-time event or hobby”
  3. The next screen will summarize any 1099-MISC income that you have entered.  For now, just click “Add 1099-MISC” just as described in the FAQ section, form 1099-MISC.
  4. The next screen will prompt you to provide details about the 1099;  if this is due to crypto income, Box 3 will be the box being used, select accordingly to match your form.  When prompted to answer which options apply, select “it’s something else” (unless this is related to compensation you received in crypto as a contractor / self-employed, which would be Schedule C) and click “Next”
  5. In the next screen, enter the payer name exactly as it appears on the 1099, then also enter the amount reported in Box 3 – it is highly unlikely you will see any federal or state withholding on a crypto-related 1099-MISC, but if there is withholding, enter it here.  Click “Next” once done with this screen
  6. You will return to the summary screen – if you need to add additional 1099-MISC forms, do it here by clicking “Add 1099-MISC” and repeating the steps above

The steps below will show you how to enter any other crypto income that is not reported on a Form 1099-MISC. Anything that you received a Form 1099-MISC should be separately reported in the appropriate section. If you did not receive a Form 1099-MISC, then follow the steps below.  Please note that you do not have to separately report each category (staking, airdrops, etc) or each wallet. You can simply report in one line, such as “various crypto income” and enter the total.

  1. Navigate to the “Less Common Income” section and click “Add” all the way at the bottom next to “Income not reported anywhere else”
  2. Click on “Start” next to “Income not reported anywhere else”
  3. In the next screen, scroll all the way down to “Additional Income not reported elsewhere” and type a description of the income and amount. If you did not receive any 1099-MISC forms, you can simply report the total of your “Tax Relevant Income” as “Various Crypto Income” then enter the total amount. If needed, you can add additional lines directly in this screen by clicking “Add Other Income” then click “Next” when done
  4. If you received a 1099-MISC and you had to report other income separately as 1099-MISC, only report amounts not otherwise included on your Form 1099-MISC. Compare this example, entering all your income in one line to the last example, reporting some under 1099-MISC and spitting out the rest

Filing With TaxAct

Basic Set-up

When you first open TaxAct, you will be given the options to list your sources of income for the current tax year. Select anything that is applicable to your current tax situation and select the applicable Cryptocurrency options.

Entering Gains

You can enter your gains into TaxAct  in one of three ways:

Entering a Summarized Transaction and Providing Attachment

The easiest way to report your cryptocurrency gains and losses is to simply summarize your transactions on Form 8949. In order to do this, you will need to, at a minimum, break out your short-term from your long-term gains. Keep in mind, when providing summarized information, you must provide the IRS an attachment with all the details of your trades (See Attachments in FAQ’s) .  In order to do this with TaxAct, follow the steps below:

  1. If you followed the step-by-step walkthrough from TaxAct, you will be automatically directed to the input screen.  Once you select “8949 PDF Attachment”, all input screens will be the same as if you get here through the “Capital Gains” section
  2. If you did not set-up the walkthrough correctly, or just need to get back to the crypto capital gains section, select “Income” under “Federal” on the menu to the left. Once at this screen, select “Review” by “Capital gains or losses”. Select ”Review” by “Form 8949” in the following screen, then select “Add Form 8949 Attachment” in the next screen.  You will now be at the same spot as the step-by-step tutorial would navigate you to
  3. Click on the checkbox to “Attach a statement of transactions instead of entering them individually” and click “Continue”
  4. The next screen will ask for the name of the brokerage, you can use “Accointing” here as we are providing your tax reports.  Click “Continue”
  5. The next screen will summarize any Form 8949 information you have added, for now, click “Add Form 8949 Attachment”
  6. In the next screen, select the Form 8949 reporting category.  If you received a 1099-B, see the FAQ’s section, I received a Form 1099-B.  Otherwise select either “Short-term Category C” or “Long-term Category F” depending on whether you are reporting short or long-term trades and click “Continue” afterwards
  7. In the next screen, enter your total sales proceeds and total cost basis for your short-term or long-term trades, depending on which you are reporting and click “Continue” once you have entered this information
  8. The next screen will just show what your data that you entered will look like on Form 8949, click “Continue”
  9. In the example above, we entered our short-term trades first, so we will now repeat the above steps to enter our long-term trades
  10. Once you have entered all your trades, click “Continue”
  11. Please note that you will need to provide your detailed information as an attachment.  See Attachments section for additional information

Entering the full detail – manually

If you wish to enter all your gains manually, follow the steps below:

  1. If you are following the step-by-step wizard, when you are prompted to enter your cryptocurrency transactions, select “Manual Entry”
  2. If you did not set-up the walkthrough correctly, or just need to get back to the crypto capital gains section, select “Income” under “Federal” on the menu to the left.  Once at this screen, select “Review” by “Capital gains or losses”.  Select ”Review” by “Form 8949” in the following screen, then select “Add Form 1099-B” in the next screen.  You will now be at the same spot as the step-by-step tutorial would navigate you to
  3. The next screen will prompt you to enter details about your sale – enter all applicable information for each sale including description, date acquired, date sold.  It is unlikely any of the less common items will apply to any of your crypto trades. Click “Continue” through this screen once you have entered all required information
  4. The next screen will ask for the category that this sale is related to.  You should select either C or F depending on whether you are reporting short-term or long-term trades and click “Continue”.  If you received a 1099-B, refer to the FAQ’s section.
  5. In the next screen, enter your sales proceeds and cost basis for the trade – remember you must enter each trade separately if not providing an attachment.  Click “Continue”
  6. The next screen will ask for adjustments related to securities – keep this blank and click “Continue”
  7. Review the options in the next screen, although likely none will apply as these are security-related adjustments.  Click “Continue”
  8. You will now be back to the summary screen.  Select “Add Form 1099-B” and repeat the process as many times as needed to enter all your sales.  Please note that this can be quite time-consuming, which is why we recommend entering a summarized transaction and providing an attachment with the details as explained above, or otherwise using the TaxAct CSV attachment

We made this video guide to provide you a detailed view of all the different steps in this guide:

Entering Other Income

  1. If you are following the step-by-step wizard, when you are prompted to enter your Cryptocurrency – Other Income, answer “Yes” if you received a 1099-MISC – more details in the FAQ section, form 1099-MISC.
  2. If you did not set-up the walkthrough correctly, or just need to get back to the crypto other income section, select “Income” under “Federal” on the menu to the left.  Once at this screen, select “Review” by “Other Income”.  Select ”Add Schedule 1 (Form 1040) Other Income” in the following screen;  the next few screens will ask questions about the type of income, select no for all of them (Foreign Earned Income Exclusion, Net Operating Loss, Form 1099-SA, Long-Term Care Payments, Estate and Trust, Schedule K-1, Personal Property Rental and Gambling Winnings) until you get to the screen asking if you received a Form 1099-MISC.  Select “Yes” in this screen then you will be at the same spot as the step-by-step tutorial would navigate you to
  3. In the next screen select “Add Form 1099-MISC”
  4. In the next screen, enter the payer’s Tax ID (TIN) exactly as it appears on your Form 1099-MISC – should be located by the payer’s information;  once you’ve entered this, click “Continue”
  5. In the next screen enter the Payer’s name and address exactly as they appear on the Form 1099-MISC then click “Continue”
  6. In the next screen, enter the data exactly as it appears on the Form 1099-MISC then click “Continue”
  7. In the next screen, select the schedule or form that the income should be reported on – unless this income is related to a trade or business, you should select “Form 1040/1040-NR, Other Income” then click “Continue”
  8. The next screen will prompt you to confirm that this 1099-MISC is not related to business income – in the case that it is, self-employment taxes would have to be declared and reported, however, this only applies for income that is considered “self-employment.”  If this is not the case, simply confirm and click “Continue”
  9. If you have more Forms 1099-MISC to add, select “Yes” in this screen then follow the process above.  For this example, we will assume that you only had one 1099 to report and that you have other reportable income that was not reported on Form 1099-MISC

The steps below will show you how to enter any other crypto income that is not reported on a Form 1099-MISC. Anything that you received a Form 1099-MISC should be separately reported in the appropriate section. If you did not receive a Form 1099-MISC, then follow the steps below. Please note that you do not have to separately report each category (staking, airdrops, etc) or each wallet. You can simply report in one line such as the example below:

  1. If you are following the step-by-step wizard, when you are prompted to enter your cryptocurrency – Other Income, answer “No” if you received a 1099-MISC, then you will be prompted to enter the amounts of “Other Income” as can be seen in the previous example, entering staking and airdrop income
  2. If you did not set-up the walkthrough correctly, or just need to get back to the crypto other income section, select “Income” under “Federal” on the menu to the left.  Once at this screen, select “Review” by “Other Income”.  Select ”Add Schedule 1 (Form 1040) Other Income” in the following screen;  the next few screens will ask questions about the type of income, select no for all of them (Foreign Earned Income Exclusion, Net Operating Loss, Form 1099-SA, Long-Term Care Payments, Estate and Trust, Schedule K-1, Personal Property Rental and Gambling Winnings, Form 1099-MISC, Form 1099-C, From 1099-QA) until you get to the screen asking if you received “Other Income – Miscellaneous”.  Select “Yes” in this screen then you will be at a similar spot as the step-by-step tutorial would navigate you to
  3. In the next screen, enter a description of the income and the amount. If you did not receive any 1099-MISC forms, you can simply report the total of your “Tax Relevant Income” as “Various Crypto Income” then enter the total amount
  4. If you received a 1099-MISC and you had to report other income separately as 1099-MISC, only report amounts not otherwise included on your Form 1099-MISC. Compare this example, entering all your income in one line to the last example, reporting some under 1099-MISC and spitting out the rest

Filing With Cash App

Entering Gains

You can enter your gains into Cash App Taxes in one of three ways:

Entering a Summarized Transaction and Providing Attachment

The easiest way to report your cryptocurrency gains and losses is to simply summarize your transactions on Form 8949. In order to do this, you will need to, at a minimum, break out your short-term from your long-term gains. Keep in mind, when providing summarized information, you must provide the IRS an attachment with all the details of your trades (See Attachments in FAQ’s).  In order to do this with Cash App Taxes, follow the steps below:

  1. From the main screen, navigate down to Investments and click on “Start” or “Edit / Review”
  2. Click on “Start” or “Edit / Review” by “Stocks, Mutual funds and bond sales, (1099-B)”
  3. Select “Summarized entry” then select who this belongs to (if you are filing with your spouse), enter the description, proceeds and cost basis and select the category (which will be either “Box C” for short-term or “Box F” for long-term, unless you received a Form 1099-B, in which case refer to the FAQs) then click “Continue”
  4. You will now be back at the summary screen.  If you need to add more sales, select “Add more sales”, otherwise click “Continue.” In the example, we entered our short-term sales therefore we will repeat the process to enter our long-term sales
  5. Please note that you will need to provide your detailed information as an attachment.  See Attachments section for additional information

Entering the full detail – manually

If you wish to enter all your gains manually, follow the steps below:

  1. From the main screen, navigate down to Investments and click on “Start” or “Edit / Review”
  2. Click on  “Start” or “Edit / Review” by “Stocks, Mutual funds and bond sales, (1099-B)”
  3. Select “One sale at a time” then enter all the required information on your sale –  select who this belongs to (if you are filing with your spouse), enter the description, date acquired, date sold, proceeds, cost and then select the category (which will be either “Box C” for short-term or “Box F” for long-term, unless you received a Form 1099-B, in which case refer to the FAQs) then click “Continue”
  4. You will now be back at the summary screen. Repeat this process as many times as needed to enter all your sales. Please note that this can be quite time-consuming, which is why we recommend entering a summarized transaction and providing an attachment with the details as explained above or entering in Cash App Taxes’ spreadsheet view

Entering the full detail – Cash App Spreadsheet

If you wish to enter all your gains manually, you can also use Cash App Taxes spreadsheet input to make things simpler. If you want to do this, follow the steps below:

  1. From the main screen, navigate down to Investments and click on “Start” or “Edit / Review”
  2. Click on  “Start” or “Edit / Review” by “Stocks, Mutual funds and bond sales, (1099-B)”
  3. Select “Spreadsheet entry” then click “Continue”
  4. In the next screen you will see a spreadsheet view – enter all your sales into this spreadsheet and select “Add Rows” if needed.  For each sale, select who it belongs to, category (which will be either “Box C” for short-term or “Box F” for long-term, unless you received a Form 1099-B, in which case refer to the FAQs), date acquired, date sold, proceeds and cost. Once you have entered all your sales, scroll to the bottom and click “Continue”

Entering Other Income

The manner in which you choose to enter any other income, such as staking, airdrops, rewards, hard-forks, liquidity pool income or other types of income, will depend on whether you received a Form 1099-MISC or not.  If you received a Form 1099-MISC, you want to report this in the 1099-MISC separately and exactly as Box 3 shows. In the example below, we show you how to enter a 1099-MISC, followed by other income from airdrops and staking for which the taxpayer did not receive a Form 1099. Cash App Taxes does not have a separate input section for a 1099-MISC to where you should enter other crypto income not reported on a 1099-MISC; however, both income on a 1099-MISC and other crypto income, get reported on the same line of Schedule 1, line 8z, therefore, you can use the same input field in Cash App Taxes whether you received a 1099-MISC or not.  You still want to separately report amounts on a 1099-MISC. Refer to FAQ’s – I received a Form 1099-MISC for more information.

  1. From the main screen, navigate down to Other Income and click on “Start” or “Edit / Review”
  2. Click on  “Start” or “Edit / Review” by “Other miscellaneous income”
  3. In the next screen, navigate to the bottom by the “Other Income” section and enter a description of the income and amount
  4. While Cash App Taxes does not have a separate 1099-MISC input screen, it is best practice to separately list any income on a 1099-MISC, as the example demonstrate, where we break out the amount reported on a 1099-MISC from other income
  5. If you did not receive any 1099-MISC forms, you can simply enter all your other income in one such as “Various Crypto Income” and enter the total in USD based on your Accointing.com Tax Report “Tax Relevant Income” total

Here’s a video walkthrough detailing the steps above:

Filing by Yourself

If you feel comfortable filing your own tax return without the help of a professional, we recommend checking out one of the solutions referenced above through which you can file your own tax return. In addition, you can go to the IRS website for a full list of filing options including a free option.

Filing with an Accountant / Tax Preparer 

If you wish to have a professional file for you, follow the steps below to find the best professional who understands your individual tax situation.

Finding a Qualified Tax Professional

If you need help with your tax situation, but feel comfortable with handling your own cryptocurrency reports with Accointing.com, then you should focus on finding a tax professional who understands your specific non-crypto tax situation (e.g., if you own a manufacturing business, find a tax professional with manufacturing experience).  

If you have a complicated crypto-tax situation and need crypto-tax help beyond the tracking and reporting provided by Accointing.com, you should focus on finding a tax professional who understands crypto.  How can you do this?  There is no perfect science, but a good approach would be to:

  • Check their website – do they have a dedicated landing page for crypto clients?  Are they a niche crypto firm?  If they do not even mention crypto, this is a red flag.
  • Schedule a call with them, talk about your current financial situation, crypto and non-crypto.  Do they seem knowledgeable? 
  • Ask if they have other clients with similar situations.
  • Make sure to ask how they charge for their work.

Finding a qualified professional is absolutely critical.  The last thing you want to do is to pay someone $200+ an hour for them to learn “what is Bitcoin” on the clock.

What Documents to Provide 

Best Practices if your CPA is Actively Helping

If your CPA is actively involved in managing your Accointing.com account, below are some of the best things you can do to make their life easier and your bill cheaper:

  • If you are the one who generally updates your portfolio for any new trades or wallets, then update your data as soon as you make a trade – it is always best to keep things updated live, plus this way your Accointing.com tracker will be accurate!
  • If your CPA is in charge of updating your data, talk about the expectation of how frequently they will update your data.  Don’t email them after every trade (unless they want you to), talk to them and set-up a schedule to determine how often you will send your data and they will update things. Being organized from day 1 can help you save on fees and know what to expect.
  • If you are trading on exchanges or blockchains that either do not have full transaction history or are not fully supported yet, please keep track of your transactions in an organized manner, such as a spreadsheet, so that these can be easily referred to and added to your portfolio later.
  • If you are considering engaging in a specific type of transaction, such as obtaining a crypto loan, talk to your CPA beforehand and ask for their opinion. There is a lot of uncertainty under current U.S. tax law with reporting many types of transactions (staking, liquidity pools, lending, rebasing cryptos, NFTs) and how you report things is often a matter of facts and circumstances and taking a position. Therefore, it is critical for you and your CPA to be on the same page – you don’t want him to report your BTC used as collateral as a sale when your intention was to treat it as a traditional lending transaction.
  • Actively plan with your CPA. Have a conversation, at least once a year (other than filing conversations) about your overall tax strategy. Oftentimes discussing your tax situation and planning ahead can help you save significant amounts. 

FAQ

I received a Form 1099-MISC

If you have received any Forms 1099 for income, you should report your income exactly as the Form 1099 shows in the appropriate section as 1099-MISC, as a copy of this form is sent to the government by the issuer and the government then matches data to your filed return.

What is a 1099-MISC? A form 1099-MISC generally reports miscellaneous income such as royalties, rents and “other”.  This “other” is used for various types of miscellaneous income and is the form being issued for staking, interest on crypto deposits such as Celsius or BlockFi, and other types of “miscellaneous” crypto income from a centralized exchange.

Please note that you will only receive this if you had over $600 of income on that exchange, and only from centralized exchanges (vs DeFi platforms).

Since the government matches data, you should report your form 1099-MISC exactly as provided to you. In order to ensure that you do not double-report this income (since this will also be part of your Accointing.com tax report), you should subtract the income already reported from any forms 1099-MISC from your total taxable crypto income reported through Accointing.com.

When entering your 1099-MISC, you will often find questions such as “was this 1099-MISC related to an activity for profit” or “was this similar to the work you do in your main job?” Oftentimes, compensation related to a trade or business that is considered self-employment is reported on Form 1099-MISC. Whenever you are self-employed, you must pay self-employment taxes in addition to your regular income tax. This only applies if the income you received is considered self-employment income, such as compensation received for providing services as an independent contractor. In the majority of cases, crypto income reported on a Form 1099-MISC will not be subject to self-employment taxes, therefore when you encounter these types of questions, you should answer as “not an activity done for profit” or a similar option.

Example:

Joe has accounts with Kraken and BlockFi, and also has a MetaMask wallet. He stakes some coins on Kraken, and has his BTC deposited on BlockFi where he gets rewards in exchange for this. Assume that he receives: $1,000 staking income from Kraken, $800 rewards income from BlockFi and $500 in airdrops income through his MetaMask. Joe’s Accointing.com tax report will show a total of $2,300 of taxable crypto income.  Because of the dollar amounts, Joe will likely receive a 1099-MISC from Kraken and BlockFi.  Therefore he should report, in his other income section:

What if my 1099-MISC doesn’t agree with my Accointing.com report?

In general, this form should agree to your Accointing.com tax report provided that the data used to generate the tax reports is directly from the exchange and that you have no gaps in your data or unclassified transactions. There could be a subtle variance as any crypto income has to be reported in USD based on the price at the time of receipt, therefore depending on the pricing source (Accointing.com uses CoinMarketCap), there could be immaterial differences in USD amount reported. 

If your 1099-MISC does not match the income reported from that exchange by Accointing.com:

  1. Verify that all the data from the exchange has been entered into Accointing.com (preferably via API, if available) and that there are no unclassified transactions or other gaps in the data
  2. Compare the difference in the amounts reported – if less than a 1-2% variance, it is likely due to pricing differences
    • Report based on Form 1099-MISC
  3. If the difference is substantial and you are 100% sure that your Accointing.com data is more accurate, report based on the 1099-MISC but add a separate line item to your tax return to adjust to the accurate amount. For example, suppose your 1099-MISC shows $800 of income, but you know you received an airdrop for $500 in the same exchange, in addition to the $800 of income, meaning the total reported by Accointing.com from this exchange is $1,300. Enter this information as shown below:
    • Enter the $800 per the 1099-MISC exactly as reported, in the appropriate section
    • Enter an additional adjustment for $500 separately under miscellaneous income, such as “Adjustment due to additional crypto income – $500”
    • If there are gaps in your data set do not use this method as the 1099 is most likely more accurate, in that case report your income per the 1099-MISC, then report any other income from other wallets or exchanges not included in the 1099-MISC

I received a Form 1099-K 

The Form 1099-K should generally not be used to report crypto transactions. If you read the instructions on the Form at the IRS website, you will see that this form is filed by a payment settlement entity for payments made in settlement of reportable payment transactions. The form was meant to report gross credit card sales by businesses – not crypto trades by individuals. So why has this form been used? Due to the lack of guidance in the industry, some exchanges choose to issue this form to report something, as opposed to nothing.

This form is completely useless to a taxpayer when reporting their crypto trades. What this does tell you is that the exchange that issued the form, has also issued a copy to the tax authorities, so they will be looking for you to report crypto transactions. Make sure to accurately report all your trades and keep all your documentation.

I received a Form 1099-B from a Closed Exchange

Whenever you receive a Form 1099-B, it is best practice to report exactly as reported on the 1099 then adjust as needed. Remember that a copy of a 1099-B is filed with the tax authorities. 

More often than not, 1099-Bs from closed exchanges (those that do not allow you to transfer crypto in or out of the exchange, such as Robinhood), are generally accurate. Since these exchanges do not allow you to deposit or withdraw your crypto, they have the full picture of your transactions and are able to provide accurate tax information. While your 1099-B from a closed exchange should be correct, it is always a good idea to ensure its accuracy by comparing to your Accointing.com detail. If you need to make adjustments, refer to the “Making Adjustments to a 1099-B” section.

If you are tracking one of these exchanges with Accointing.com, you will have to exclude the amounts reported from these exchanges from what you report with Accointing.com. For example, if your Accointing.com tax report shows $10,000 of gains but $3,000 relate to Robinhood, report $7,000 of gains from Accointing.com and report Robinhood exactly as reported on your 1099, which should match Accointing.com provided that the data entered was correct.

You should report this on Form 8949 Part I with box A or B checked for short-term, or Form 8949 Part II with box D or F checked if long-term as instructed on the form.

I received a Form 1099-B from an Open Exchange

Whenever you receive a Form 1099-B, it is best practice to report exactly as reported on the 1099 then adjust as needed. Remember that a copy of a 1099-B is filed with the tax authorities. 

If you received a 1099-B from an exchange to which you transferred crypto, either into or out of the exchange, your 1099-B will be missing tax basis and thus be inaccurate when it comes to reporting your gains and losses. A 1099-B with missing tax basis will have an asterisk in place of the basis and explained in small font, will indicate that the asset was transferred into the exchange and therefore the basis is missing.

When a form 1099-B is filed, a copy gets sent to the taxpayer and a copy gets sent to the tax authorities, therefore reporting based on the 1099-B is important to avoid notices. But if the basis is missing or transactions are excluded, the gain or loss reported will be very distorted, which is a problem for both taxpayers and the tax authorities. Unfortunately we have no clear guidance at the moment, but the best way of dealing with this issue is by reporting exactly as reported on the 1099 and adjusting your totals on your Form 8949 so that those agree to your Accointing.com tax report.

Adjusting Your 1099-B

There are two ways in which you can make adjustments to a 1099-B when reporting on your Form 8949. Pick whichever way best explains your situation.

  • If your 1099-B indicates to report on Part I with box A checked or Part II with box D checked, then make any adjustments on column G of Form 8949 and use code “B” for column F
  • If your 1099-B indicates to report on Part I with box B checked or Part II with box E checked, then enter the correct basis in column E

How can you identify the correct basis for a given exchange using your Accointing.com reports?

  • Upload your Gains and Losses csv file to a spreadsheet program, I would recommend Microsoft Excel or Google Sheets – the instructions below are specific to Sheets, but the Excel menus work the same
  • Select all the data displayed, then go to “Insert” and select “Pivot Table, keep the options as they appear on the prompt, then click on “Create”
  • Drag and drop the headers needed to recreate the data into the Pivot Table Editor
    • Drag “Exchange / Wallet” into “Rows”
    • Drag “Long/Short” into Rows, underneath “Exchange / Wallet”
    • Optional: you can drag sold currency if you want the detail by coin
    • Drag “Fiat value in USD”, “Cost basis in USD”, “Fee in USD”, “Gains/Losses < 1 Year”and “Gains/Losses > 1 year” in that order underneath “Values”
  • Now you will see your gains and losses sorted by exchange and by short vs long-term – you should be able to identify the correct numbers for the exchange that you received the 1099-B for

The above assumes that you can cleanly reconcile the data from the 1099-B to your Accointing.com report by exchange. Oftentimes, this may not be possible due to other discrepancies with the data. In this case you can adjust your complete 8949 by:

  • Enter any 1099-Bs exactly as reported to you, using the appropriate section of Form 8949 (Part I with box A or B checked or Part II with box D or E checked)
  • Once you have entered all your crypto 1099-Bs, subtract the total reported from those from your Accointing.com totals – make sure to separate short-term and long-term accordingly
  • As a final review, add up all your crypto gains and losses reported on any Forms 8949 and make sure they agree to your Accointing.com gain or loss
  • This method assumes that you have fully reviewed all your data and connected all your wallets; if you have any gaps in the data set, this will not produce an accurate result

About Form 8949

Sales and exchanges of crypto are reported on Form 8949, either Part I or II depending on whether short or long-term. Form 8949 is a form that is part of each individual taxpayer’s tax return and your tax software will populate this, along with the rest of your tax return, with the data you enter about your crypto transactions (if you download a copy of your completed tax return, you can see your Form 8949 as filed with the government). The Form 8949 provided by Accointing.com is informational for you to enter into your own tax return. The summary of Form 8949 flows onto Schedule D, which summarizes all your Forms 8949, and page 2 of Schedule D summarizes your total gain or loss to be included as part of your income on line 7 of page one of Form 1040.

The general requirement is to provide all the required information for each transaction on Form 8949. The required information that must be reported for each sale is:

  • Description of the property sold or disposed of (quantity and name of coin e.g., 1 BTC, 10 ETH)
  • Date that the above property was acquired
  • Date that the property was sold
  • Proceeds from the sale (either the USD you received for your crypto, or the fair market value of the crypto acquired in exchange for the crypto sold)
  • Cost basis of the property (the cost of your asset, if acquired with USD this is the cost or if acquired with crypto, the fair market value of the crypto at the time acquired)
  • Adjustments, if any – see Adjusting Your 1099 B for information on crypto adjustments, otherwise, this is generally used for adjustments applicable to other securities such as wash sales (which might be applicable to crypto in the near future)
  • Gain or loss – this is a calculated field, proceeds less your cost basis 

This means that technically, you have to separately report each sale or exchange that has a different acquisition date. This can be very time consuming due to the volume of transactions most crypto investors have, and even with software, there are limitations such as TurboTax ability to only handle 4,000 transactions on a report.

Fortunately you are allowed to summarize your information when reporting on Form 8949.

Summarizing Transactions

As mentioned above, due to the volume of transactions, taxpayers are allowed to summarize their transactions when reporting on Form 8949. What you can do is report all your crypto trades with one, maybe two lines at the most. At a minimum, you always have to break out your short-term trades from your long-term, but outside of that, you could summarize the transactions. If you do summarize your transactions, you must provide the IRS an attachment with all the same information as what the Form 8949 requires (in full detail). Refer to Form 8949 Instructions, page 4, Exception 2 for information on summarizing transactions.

Suppose you trade across several exchanges and also use various DeFi wallets. Accointing.com will generate a tax report and a Form 8949 that includes the taxable income from all your trades. You could add up all the short-term transactions on your Accointing.com Forms 8949 marked as “(C) Short-term transactions not reported to you on Form 1099-B”, and also add up all the long-term transactions marked as “(F) Long-term transactions not reported to you on Form 1099-B”, and only report these totals. So your Forms 8949 might look like:

Form 8949 Part I, (C) Short-term transactions not reported to you on Form 1099-B

  • Description: Various Crypto Trades – See attached
  • Date acquired: various, blank, 99/99 (depending on software)
  • Date sold: various, 12/31/21, or any other date, this doesn’t matter when summarizing
  • Proceeds: Total of all your short-term Forms 8949
  • Cost: Total of all your short-term Forms 8949
  • Code: M (this code indicates you are summarizing your transaction)
  • Adjustment: blank
  • Total gain or loss: automatically calculated

Form 8949 Part II, (F) Long-term transactions not reported to you on Form 1099-B

  • Description: Various Crypto Trades – See attached
  • Date acquired: various, blank, 99/99 (depending on software)
  • Date sold: various, 12/31/21, or any other date, this doesn’t matter when summarizing
  • Proceeds: Total of all your long-term Forms 8949
  • Cost: Total of all your long-term Forms 8949
  • Code: M (this code indicates you are summarizing your transaction)
  • Adjustment: blank
  • Total gain or loss: automatically calculated

Attachments

So you have entered your summarized transaction and need to provide an attachment that contains the detail for each trade. There are two parts to this process:

Generating the Attachment:

  1. Due to the volume of crypto transactions, Accointing.com’s pdf Form 8949 provides summarized transactions, so this file should not be used as it doesn’t contain all the details
    1. Locate your “Form 8949 Exceptions Short-Term” and “Form 8949 Exceptions Long-Term” csv files provided with your tax reports.
      1. Depending on the tax software you are using, you may be able to upload the Form 8949 CSV file as your attachment, but in general you might need a pdf or print-out, in which case follow the next step
    2. Upload these documents to any spreadsheet program such as Microsoft Excel or Google Sheets
    3. Make sure all columns are fully visible and that there are no hidden characters
    4. Print all the content of this screen, but when selecting the printer select “Save as PDF”
  2. Depending on the spreadsheet program, the option to directly download as a pdf might be built-in
  3. If you had both, short-term and long-term trades, you will need to create two pdf files, one for the short-term trades and another for the long-term trades – save these files and go on to #2 below

Sending the Attachment

  1. Some tax tools allow users to upload pdf attachments to file electronically; if the tax tool you are using allows for this, upload the pdf files generated above as your attachment
  2. Depending on the tool you are using, you may need to enter some basic information about the attachment, search for something such as “Form 8949 Exception Statement”
  3. Once the file is uploaded, your software will confirm if it was attached, but if successful, it will be electronically filed when you e-file your tax return
  4. If the tax tool you are using does not allow for electronic attachments, you will have to mail-in your attachment along with Form 8453
    1. Form 8453 must be mailed to the IRS within 3 business days after receiving acknowledgement that the IRS has accepted the electronically transmitted tax return (your tax tool would communicate this to you)
    2. Enter all your personal information at the top of the form, including your name, last name and social security number, your spouse’s name, last name and social security number (if filing jointly) as well as your home address
    3. Check the last box on Form 8453 that reads “Form 8949, Sales and Other Dispositions of Capital Assets (or a statement with the same information), if you elect not to report your transactions electronically on Form 8949”
    4. Don’t sign the form, as indicated
    5. Print the pdf files generated in step #1, and include these along with the Form 8453 in an envelope
    6. Mail Form 8453 and your attachments to: 

Internal Revenue Service 

Attn: Shipping and Receiving, 0254 

Receipt and Control Branch 

Austin, TX 73344-0254

Extending Your Tax Return

To extend your tax return, you should read the information provided by the IRS. You can generally extend your tax return for free by filing Form 4868 by the unextended due date of Monday, April 18, 2022. Extending your tax return allows you to file your tax return by October 17, 2022. You can file an extension through whichever tax tool or by following the instructions provided at the links above; you do not need to use the same tax tool that you filed your extension with to file your tax return.

Extending your tax return does not extend your time to pay if you have a balance due, however. While this may seem odd, if you are underpaid by April 18, 2022 you will be subject to late payment penalties and interest – oftentimes immaterial but you can be the judge of that by reading more about it. This means that if you expect that you will owe money, you must estimate this and pay this amount by the unextended due date of April 18, 2022. If you do need the time to extend your tax return because some information isn’t available, you will have to estimate the income for extension purposes. As you can see, this is an imperfect science, so when in doubt, if you have the cash-flow, it is best to overpay substantially the extension payment to make sure you avoid any penalties and interest. You can always get this money back when you file your (extended) tax return, or choose to apply this as an estimated tax payment towards the 2022 tax year.

Extending your tax return might be a very good idea for many crypto investors this year. This is because there is a lot of uncertainty surrounding key taxation issues in crypto (such as staking, lending, liquidity pools, NFT’s) and there is a chance that we receive additional guidance from the Treasury on some of these items. This also allows you to more carefully review your data (especially if you used DeFi and NFT platforms) and finalize your tax return by October 17. 

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