TurboTax, by Intuit, is the most popular tax preparation tool for American taxpayers to file their individual income tax return. While their online tool is rapidly growing in popularity, their desktop version provides additional flexibility to taxpayers looking to file multiple returns or needing additional support for self-employed or business tax reporting. With your Accointing tax report, you can enter your crypto information to easily file your crypto taxes with TurboTax.
This article will guide you through the process of reporting your crypto taxes with TurboTax Desktop.
If this is the first time you are using TurboTax Desktop, you will need to spend some time entering your personal information. During this setup, you will be given the option to choose whether you want TurboTax to guide you or let you work on your tax return at your own pace. Regardless of your choice, the input screens will be the same.
One of the biggest advantages of TurboTax Desktop over TurboTax Online is that you can actively flip back and forth between their EasyStep guided input and your actual tax forms, so you can see how your Form 1040 is progressing as you prepare your return. As you get started, navigate to the Forms view, and make sure to check yes if you can answer yes to the question: “At any time during 2022, did you: (a) receive (as a reward, award, or payment for property or services); or (b) sell, exchange, gift, or otherwise dispose of a digital asset (or a financial interest in a digital asset)?”
Reporting your Gains
The easiest way to report your cryptocurrency gains and losses is to summarize your gains into short and long term. This will save you a lot of time, but you will need to send an attachment with detailed information.
- In the income section, navigate to the “Investments and Savings” section and select “Stocks, Mutual Funds, Bonds, Other”.
- The following screen will ask you whether you had investment income in 2022, such as crypto sales, answer “Yes”.
- The following screen will prompt you to answer whether you received a 1099-B for these sales. Select “No” unless you did receive a 1099-B from any exchanges.
- On the following screen select “I’ll enter a summary for each sales category” and proceed to enter your proceeds and cost basis for your short-term trades, then select “Short term (Box C)” from the dropdown. This information is summarized for you on page 1 of your Accointing tax report. Select “Continue” when done.
- You will see a summary screen showing your gains so far. If you need to add more sales, such as your long-term sales, select “Add” and repeat the steps above for your long-term sales. Short-term gains are taxed differently than long-term gains, therefore you must always report them separately.
- Remember to send in your attachment. You will need to mail this information along with Form 8453, as the desktop version of TurboTax does not allow for electronic filing of attachments.
For additional information on generating and filing your attachment to form 8949, check out our Crypto Gains – Attachments to your 8949 guide.
Importing Your Detail
If you do not wish to send in your details and would rather import your data directly into TurboTax, accointing provides you with a file that you can easily import. If you do not see this file in your tax reports, re-download your reports by selecting “I file using an online tool” and you should see a “TurboTax Desktop” zip file containing the txf file that we need to import. Follow the steps below:
- Navigate to the File menu and select “Import” > “From TXF Files”.
- Select “Choose a TXF File”, upload the TurboTax Desktop file provided in your reports and select “Continue” once it has loaded.
- The following screen will confirm that your trades (1099-B) is ready for import. Select “Import Now”.
- Once TurboTax confirms that your trades have been imported, select “Done”.
- You will now be back at the income summary screen. You will notice a dollar amount by “Stocks, Mutual Funds, Bonds, Other”. Select “Update”.
- You will now see your total gross proceeds, as well as your gain or loss from your tax report. These amounts should match your short and long-term proceeds added together, as well as your total net gain or loss. If the amounts do not agree to your report, select ‘Edit’ and update the information accordingly.
Reporting Your Crypto Income
We now have to enter any other taxable crypto income such as mining, staking, airdrops or hard forks. Keep in mind that if your income is from a trade or business, such as a Bitcoin mining operation, you will need to report as such. For everyone else, how you report this income will depend on whether you:
Received a 1099-MISC
- In the income section, navigate to the “1099-MISC and Other Common Income” section and select “Form 1099-MISC”.
- The next screen will ask if you got a 1099-MISC, click “Yes”. If your 1099-MISC is due to self-employment income, you should enter that under the appropriate section, such as the “Business Income and Expenses” section.
- On the next screen, enter the name of the payer, the payer’s federal ID number, as well as any amounts reported in boxes 1-18. If you received this for crypto earned on an exchange, likely only box 3 will be populated.
- 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”.
- 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”.
- 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”.
- The next screen will ask how often you have received this type of income, you can keep “I got it in 2022” selected and click “Continue”.
- 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 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 providing services as a business. Click “Continue”.
- If you received other 1099-MISC forms, select “Yes” and repeat the process, otherwise select “No” and click “Continue”.
Did not receive a 1099-MISC
- In the income section, navigate to the “Less Common Income” section and select “Miscellaneous Income, 1099-A, 1099-C”.
- On the following screen, select “Other reportable income”. Click “Yes” on the following screen.
- On the next screen, enter a description of the income and the amount, and click “Continue”. If you did not receive any 1099-MISC forms for crypto income, you can report the total of your taxable income per your accointing tax report as “Various Crypto Income” then enter the total amount. If you received a 1099-MISC for some of your crypto income, follow the 1099-MISC instructions above and be careful to not double report this income as it will also be on your accointing tax report. Refer to our Crypto Forms 1099 article for more information on 1099s.
Capital Loss Carryovers
If you filed with TurboTax in the prior year and you either used that return or imported your TurboTax Online return, any capital loss carryovers should be automatically rolled over into this year. However, it is a good idea to verify that these amounts are correct as they impact your current year tax return. If this is your first time using TurboTax Desktop, you will need to enter this information regardless.
- In the income section, navigate to the “Investments and Savings” section and select “Capital Loss Carryover”.
- Click “Yes” on the following screen after which you will be asked if you know your carryover amounts. You can generally find your short and long-term capital loss carryovers included with the additional information provided by most tax tools and tax preparers. If you do have these amounts, enter them on the following screen.
- If you do find your carryover amounts, enter them directly on the following screen. If you do not have your exact carryover amounts, you will need your 2021 Form 1040 and the following amounts:
- Schedule D line 7 – Net short-term capital gain or (loss)
- Schedule D line 15 – Net long-term capital gain or (loss)
- Schedule D line 21 – Allowable loss
- Form 1040 line 15 – Taxable income
- Alternative Minimum Tax (AMT) differences for carryovers
- Form 6251 line 4 – Alternative minimum taxable income
- Click on “Continue” and if you have already entered your capital gains or losses for 2022, TurboTax will summarize how your carryover can be used this year, and what you can carry forward to 2023.
For additional information on filing your crypto taxes, including 1099 questions, extending your tax return and attachments, check out our Crypto Tax Filing Guide 2023.
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.