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Have you left your crypto taxes for the very last moment? Here’s how to get your crypto taxes done by April 18 with the least amount of friction possible.
It is clear from the IRS that Cryptocurrency is taxed – and that they’re able to track crypto investments through various channels. Capital Gains Tax is sometimes applied to crypto. Income Tax can also be applied. You’ll pay long-term Capital Gains Tax between 0% to 20% or you’ll pay short-term Capital Gains Tax or Income Tax between 10% to 37%, depending on your Income Tax bracket.
Let’s just cut to the chase with what you need to do to report your crypto tax by April 18.
- Get a comprehensive view of all your crypto dealings, from every exchange – and the very beginning of your trading journey.
- Aggregate your complete trading history into a single chronological record – and in US dollar terms.
- Find your capital gains. Divide the amount into long-term or short-term gains.
- Find out how crypto can increase your income.
- After you are aware of the totals, you can file.
- Get in touch with your accountant.
Koinly allows you to aggregate all transactions
If you’re an active investor using multiple wallets, exchanges and blockchains, getting your complete crypto transaction history together is no quick job.
To do so manually, you’d have to download CSV files from every exchange, wallet and blockchain you use. Then you’d need to identify your transfers from your taxable transactions, identify which kind of tax you’d need to apply for each taxable transaction and calculate your subsequent capital gains or losses, as well as the fair market value of any crypto income.
KoinlyIt makes it simple to consolidate your transactions history. Koinly has been supporting crypto investors with a fully IRS-compliant tax reporting system since day 1, so if you’re looking for a solution right now – it can be as simple as jumping onto Koinly and connecting all your wallets, exchanges and blockchains. Koinly supports more than 650 exchanges, wallets and blockchains – all you need to do is connect via API or by importing a CSV file of your transaction history. Let’s take a look at how.
Among Koinly’s supported exchanges are Binance, Coinbase, FTX, Kraken, and KuCoin. You can access the API to automatically retrieve your transaction information. Just head into your exchange and create a read-only API key – you’ll normally find this under API management or settings.
Once you’ve created your key, copy your API key and API secret and head over to Koinly. Click on the desired exchange, select the auto-sync setting and then enter your API details. Your transaction data from that exchange will automatically be imported into Koinly.
If you need assistance connecting Koinly to a specific exchange, wallet or blockchain – don’t panic, Koinly have done the digging for you. Step-by-step instructions on connecting to Koinly are provided in the Koinly Integration Pages.
Convert crypto values into US Dollars
Once you’ve got all your exchanges, wallets and blockchains connected with Koinly, it does the complex work of converting all your crypto into fiat currency terms. You can save hours by not having to search through historic crypto prices on price-aggregator websites.
Koinly uses a variety of methods to determine the market price for your transaction. First, it’ll try to determine the market price using data available from your transaction history. Koinly, for example, will determine the market price if you purchased ETH with USD at a particular time.
Koinly will identify market prices if you purchased crypto in a fiat currency other than the one that was used to buy it.
Finally, for transactions that don’t involve any fiat currency – like income or crypto to crypto trades – Koinly uses market price aggregators like CoinMarketCap or CoinGecko to identify the market price for your crypto. Koinly may also fetch market rates directly from certain exchanges if you’ve used API.
Koinly now has the ability to calculate crypto taxes, having converted everything into dollars.
Calculate the capital gains and net income from crypto
Koinly will help you identify your taxable transactions and non-taxable transactions. It also calculates your capital gains or losses as well as crypto income.
For capital gains – Koinly will identify each time you’ve sold, traded or spent crypto and calculate your subsequent capital gain or loss for you. It even separates out your short-term capital gains from your long-term capital gains, so you can rest easy knowing you’re not paying too much tax.
For mining, staking, and interest income – Koinly identifies the fair market value of any crypto income in USD on the day you received it. If you have to separate them, this is included in your crypto tax return.
Koinly is different. DeFi can be a challenge when it comes to tax season. Koinly supports a wide range of popular web wallets used to interact with DeFi protocols – so whether you’re providing liquidity on Uniswap or staking CAKE on PancakeSwap – Koinly can handle it all. Koinly is evolving just as quickly as the DeFi market, so we’re always adding support for new tokens and protocols.
Now that your crypto taxes have been calculated, there’s just one step left… creating an IRS-compliant report.
Crypto taxes
Koinly is the ReportNo matter what method you use to file, you will always have the information you require.
Register yourself
Though it’s probably too late to file with paper forms unless you have an extension – we’ll cover it anyway.
You’ll need to report each disposal of crypto (any time you sold, traded or spent crypto) on IRS Form 8949, as well as your net capital gain and loss on Schedule D. Koinly provides this exact form, pre-filled with your transactions.
You’ll also need to report your crypto income on Schedule 1, generally under the ‘other income’ section – although if you’re self-employed this would go on Schedule C instead. Koinly has the solution. Download either the Complete Tax Report, or the Income Tax Report. This will provide all of your crypto income in USD and can be added to your forms.
After completing your additional forms, fill out your Form 1040 and attach your Schedule D, Form 8949 and Schedule 1 (or C) and you’re done!
Working with an accountant
Have an accountant at your disposal? Koinly simplifies the job of accountants!
You can grant Koinly access to your accountant. Log in to your Koinly account and go to Settings, Team, invite your CPA, tax agent, or accountant. They will be able to view your Koinly accounts and complete your crypto tax returns for you.
Tax app
Do you file with TaxAct or TurboTax? Koinly is also able to create reports for these applications.
For TurboTax, just download the TurboTax Online or Desktop Report from Koinly (depending on the version of TurboTax you’re using) and then upload this to TurboTax when you’re filing your investments and savings. If you’ve got income, add the total income figure from your Koinly Complete Tax Report (or Income Tax Report) as miscellaneous income.
For TaxAct, you’ll download your Form 8949 and Schedule D from Koinly (as well as your Complete Tax Report or Income Tax Report if you have any crypto income). This can be uploaded to TaxAct for filing capital gains. You can also report crypto income under TaxAct.
If you’re racing to get your taxes done, Sign up for Koinly today!
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