/r/CryptoTax
Proper taxation of cryptocurrency gains and losses.
This sub is for discussing proper taxation of cryptocurrencies, and legal tax minimization. It is focused on the US, but discussion about crypto taxation in other countries is welcome as well.
Note: The users of this subreddit do not provide tax, legal or accounting advice. This material on this subreddit is here for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. The opinions posted on this subreddit are wholly owned by the users who post them.
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/r/CryptoTax
I stupidly played around with leveraged crypto futures a couple of years ago and lost everything. I tried to use Koinly to do my taxes, but their results just didn't make sense. It said I owed taxes even though I lost maybe 100k over dozens of transactions.
I have avoided filing for a couple of years because of the embarrassment and uncertainty of what to do. The IRS is now sending me notices that I need to file.
I am currently flat broke and unemployed with just a tiny bit of savings left and looking for an affordable CPA who can help me and understands the type of transactions I did (broker was Phemex and transactions were mostly BTC futures contracts that were liquidated).
I have two (hopefully) basic questions on how crypto taxes are calculated. I am in the UK, but perhaps the basic principles apply in other countries too.
I'm an american. So say if I send my crypto to a friend in Hong Kong, and he sells it for me and gives me the cash back. Am I able to avoid capital gains taxes since there is no capital gains tax on digital assets in Hong Kong?
I have been seeing a lot of similar questions around how crypto gifts are taxed, so I thought I'd make a post breaking it down and clarifying some of the recurring questions.
There you have it. That is how gifts are taxed. There seems to be a lot of confusion (rightfully so) on how to handle crypto gifts. So I've linked straight to IRS guidance for each piece in order to avoid misinformation.
If there are any other professionals out there who have differing interpretations on the guidance, I'd love to hear from you and get your opinions. Always looking to knowledge share.
Happy to answer any questions or clarify any of the above. Cheers all and hope this helps.
To keep it short and sweet, I was gifted ~$13k in ethereum back in May 2022.
I then proceeded to sell that ethereum throughout 2023, at a loss from the time it a as gifted to me. I sold it through coinbase.
Do I need to report this? Does coinbase report this to the irs?
The Question: When the irs does their own calculations of your crypto taxes, they can be wildly incorrect (no reconciliation of transfers which then become "capital gains", no accounting for fees, which for a day trader has a massive impact). Is it their job to "disprove" my tax results from Cointracking, when provided fully, or are they able to take the position that it's my job to attempt to reconcile their incorrect data line by line without knowing their process? It seems to me if I submit correct data, it's on them to accept it, or show me any error on my part. Which is it? (no need to read further). I'm looking for a reasonably affordable crypto tax pro, feel free to d.m.
Detail:
I submitted 8949. Irs responded with vastly different figures. For context, I used multiple exchanges and lost a ton of money day trading. Conversely, they say I gained the same amount, so their results are 200% off. We're talking about significant numbers, say a year's worth of income on each side. I spoke with a crypto CPA who said there are only a few people he works with (tax pro's) who have more of an understanding than I do about how to process taxes correctly. (I used Cointracking and have a degree in a math related discipline).
The irs asked for my details of cap gain/loss which I am in the process of preparing as well as responding to their incorrect data. (troubleshooting their results)
There are over 200k transactions which took me more than a year to reconcile on my side. There is no possible way for me to decipher where their errors are, and I've heard negative reviews of taxbit (the software they apparently use).
I don't know if they will accept my correct process, or tell me to disprove theirs, (and give me 10 days to do it, typical so far of the process). Any experience here? I'd like to hire a crypto CPA so they know they're dealing with a professional, with career liability. I don't know if I can find one for a reasonable cost with 200k+ transactions. Thanks.
I use Coinbase Commerce to collect payments from customers. I am now using koinly.io and cointracker.io to calculate gains/losses from transfers out of Coinbase Commerce.
Coinbase Commerce has a web page that shows your crypto addresses:
https://accounts.coinbase.com/profile/crypto-addresses
This page shows "tradable assets" with addresses of each.
There is a downloadable CSV report for "all transactions" that shows crypto addresess.
These two don't match! WTF!
The CSV has two interesting columns called "receiver address" and "transaction hash. The web page has "address" and "age" (in days).
If I compare the addresses on these two, they don't match.
I do not see a way to connect Coinbase Commerce to cointracker.io, koinly.io, or any other similar websites. They have integration with various Coinbase products, but I don't see any for Coinbase Commerce.
What should I do? Any advice?
If im on a college visa, with a american bank account getting funds from my home country, putting that in crypto through the anericna card, but my kyc in exchanges is of my home country, and im not allowed to earn in america in my college visa, do i have to pay tax in america? Or what?
Here's the scenerio... I wanted to get my family (mom and sister) involved into BTC, so I told them let's all put in 1k each to start and 50$ each a week into cold storage..
2/14/21 0.061422 BTC for 3k USD..(lol top buyer)
Basically every sunday I bought $150 worth of BTC ranged from 0.0022 - .007(juicy dip)
Fast forward today it has .82 BTC.. my mother wants to burrow 20k worth (0.31 BTC) to pay off her house .. my sister and I agree.
Mother goes sells .31 BTC on Coinbase for 20k.. what is the tax burden?
If someone paid me in crypto for money that they owed me then how do I know what my cost basis is when I go to sell?
Is it the same as if someone gifted me the crypto or is it different?
I used Accointing crypto tax software for a few years and was very pleased with it. Glassnode bought them, but everything stayed the same, so all was good.
Then BlockPit bought them and decided to kill the Accointing platform and just made it an easy transition to use their platform. Unfortunately, at least in my opinion, their platform is behind what Accointing offered, no HIFO support, no mobile app support, etc.
I’m looking for suggestions on what to use going forward. I need to get this figured out for next tax year and want to stick with something proven and reliable. I know Koinly has been around for a long time and I was able to import my Accointing file into Koinly, so that’s an option, but are there any other options I’m overlooking?
Anyone else in the same boat and what are your plans?
I get sent USDT and ETH for work I’ve done from a crypto projects marketing wallet. I usually cash out and then send to my bank account same day or week.
For example, I’ll get sent $1,200 USDT and I’ll then convert to cash and cash out.
Am I able to mark some of these gains as a gift so it’s taxed differently without the sender calling it a gift on his end or are all crypto sent to me for work have to be capital gains.
For the love of all things, the only thing I want AI to do is be my personal assistant to help me sort through all my transactions.
But another thing. This should be govt’s job.
How are you going to incarcerate people using faulty information?
Have you tried using Koinly? It says I made 50 million dollars… BIG LOL
I’ve been negative for 3 years.
How is IRS gonna know that a shit coin airdropped to you “worth” 2 mil is actually bogus???
POINT 2:
How is the IRS going to verify what you report? If they are using anything similar to Koinly, it will be wildly inaccurate! If I have to manually go through and check each transaction, do you suppose the IRS will do that for every single person? Heck nah
We need AI to be developed to read all the blockchains properly and actually make reporting your taxes a feasible task. And this is where I believe my tax payer money should be spent, to develop this tech.
Not to bog the system down with more people getting screwed by the IRS.
POINT 3:
A BEAUTIFUL PROGRAM that allows you to ask it to sort through and find any coins that were sent to your address that you’ve never interacted with, a shit coin airdrop, and say “Hey AI, flag all of these coins”
Dear sweet baby Jesus,
For all the awesomely cool stuff humans are making, can this PLEASE be a bare minimum???
I feel like I’m living in CrazyWorld where you can go and lose all your money in a digital casino and then go to prison cuz the govt is lacking in how to accurately understand anything, so straight to jail with you!
End rant.
EDIT:
AND ANOTHER THING.
I want to pay my taxes. Are you friggin kidding me that if I just put a $1 cost basis on all my gains, literally handing you money, Mr. IRS, you are still going to audit me?
This is just the height of insult.
Make crypto easier to pay taxes. We all want to pay so we don’t get in trouble. But it is TOO HARD.
I’m shouting at a wall. I know.
So In 2021 i was gambling with crypto and when i would profit i would sell my bitcoin and send it to my bank. I was unaware that this had to be reported so now im getting letter from the IRS that I owe 7,000 from non reported taxes. I know I am not the first person that has gone through this very same thing. looking for any type of insight or help please and thank you.
I don't think crypto will be pseudo-anonymous or privacy-preserving anymore, at least in the US. Last Friday, the IRS issued the long-awaited draft Form 1099-DA, the first tax form specifically designed to collect your ID and detailed transaction data at scale from "brokers".
Brokers (CeFi exchanges, certain DeFi exchanges, and wallets) will be required to generate this form for each sale transaction and submit that info to the IRS and you (similar to stock brokers) starting 1/1/2025.
The Form captures unsurprising data points such as date acquired, date sold, proceeds, and cost basis of crypto assets sold. This information is needed and helpful for you to complete your crypto tax filings. However, the collection and reporting of the following additional data points (especially wallet addresses) to the IRS at scale could lead to major privacy and security concerns.
Sales-related data points
- Box 11a: Sale transaction ID (TxID)
- Box 11b: Digital asset address from which the units were sold
- Box 11c: Number of units sold
Transfer-related data points
- Box 12a: Transfer-in TxID number
- Box 12b: Transfer-in digital asset address
- Box 12c: Number of units transferred in
Furthermore, in the new draft Form 1099-DA, the IRS has included “unhosted wallet provider” as a check box. This further signals the IRS’s intention to include unhosted wallets under the broker definition despite the industry pushback.
What does this mean to you?
Going forward, you will likely have to provide KYC information before creating an unhosted wallet and/or when interacting with platforms via unhosted wallets. This could drastically change how users interact with crypto platforms. The will change "DeFi" as we know it today.
Note that this form and the proposed regs are still not finalized.
What do you guys think?
From .csv file I have like 400k+ Transactions.
Imported to Koinly and I have 80k+ Transactions (Koinly merges trenasctions with same time and ticker). Still there can be many 100+ transctions of USDT fees on the same day.
Manually filtered and I have 20k+ trades. The rest 60k+ are USDT fees and stuff.
I've consulted like 3 CPAs and they all charge based on .csv number.
Is there any CPA that charges only trades not random fees and fundings?
Hello, if I receive income pre tax, in my case paid in usdc, and I use that income to purchase assets, in my case btc, if I use that asset as collateral to borrow a loan on a decentralized platform, do I still need to pay tax on the original income at the end of fiscal year or not?
I filed my 2022 taxes and forgot to report 150 from a 1099-b( the basis doesn’t say short term or long term.) What should i do? Should i amend my return or wait to see if it goes through?
Will they just send me a letter asking about it? Or since it’s $150 will they not even bother
Hello, I've been operating in Kraken, occasionally using margin. This means that my ledger includes a number of transactions where fees are paid in crypto (thus triggering capital gain/losses).
The main crypto tax online tools (ie Koinly, CryptoTaxCalculator, and Coinledger) are incapable of processing the data correctly. I've tried connecting directly using API keys and importing exported CSV data. It does not work for margin transactions and rollover fees.
Has anyone suffered this too? How did you solve it? I felt stuck as decided to build my own script to deal with it but it's not a trivial task. Thanks.
Edit: Just discovered the open-source project BittyTax, a python application, which seems quite nice for UK tax residents.
Been doing crypto mining for years and filing with schedule C as a sole prop, and back in 2022, got into crypto nodes. Made about 50k in income from the nodes, but lost over 100k overall (!50k net loss). Using cryptotaxcalculator.io, and from what I’ve read, it seems that I can claim the node creation cost (eg: for Strongblock the value of 10 STR tokens) as a misc expense and use that to offset my node income on schedule C? The question is, will this 50k net loss (which also offsets some of my regular W2 income) throw any big flags? On schedule C misc expense, it just shows under 3 lines: crypto node expense, transaction expense, contract approval fees. Do I need to also submit the detailed breakdown that the cryptotaxcalculator.io software included of each node expense? or should I save that only in the event of an audit?
Hey guys, I didn't file taxes in 2022 and made over 200+ crypto transactions. Is it still possible to tax loss harvest for 2022? Overall, I lost money on crypto trades for 2022, so I'm hopeful I can get some money back.
If I pay capital gains on my crypto and wish to withdraw into my bank account, do I need to pay income tax thereafter?
For safemoon and other worthless tokens, can I simply send them to a burn address to realize capital losses?
This is on the binance smart chain for tokens
Hello I live with my parents still and I accidentally claimed as an independent on my Coinbase taxes and I guess it’s really messing things up for my parents? Does anyone know how to go back and fix this? Any help would be greatly appreciated.