What are the most common mistakes to avoid when filing crypto taxes?

9 answers

• Nov 26, 2021 · 3 years ago
  One common mistake to avoid when filing crypto taxes is failing to report all of your cryptocurrency transactions. It's important to keep track of every buy, sell, trade, or transfer, as the IRS requires you to report all taxable events. Failing to do so can lead to penalties and audits. Make sure to use a reliable crypto tax software or consult with a tax professional to ensure accurate reporting.
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• Nov 26, 2021 · 3 years ago
  Another mistake to avoid is not properly calculating your gains and losses. Cryptocurrency is treated as property by the IRS, which means you need to calculate your capital gains or losses for each transaction. This can be complex, especially if you have multiple trades or use different exchanges. Consider using a crypto tax calculator or seeking professional help to accurately calculate your tax liability.
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• Nov 26, 2021 · 3 years ago
  At BYDFi, we understand the importance of accurate tax reporting. One common mistake we often see is neglecting to report airdrops and forks. These events can result in taxable income, and failing to report them can lead to penalties. Make sure to keep track of any airdrops or forks you receive and consult with a tax professional to determine the proper reporting.
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• Nov 26, 2021 · 3 years ago
  Don't forget to report any income earned from staking or lending your cryptocurrencies. While it may be tempting to overlook these earnings, they are still subject to taxation. Keep records of your staking rewards or interest earned from lending platforms and include them in your tax calculations.
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• Nov 26, 2021 · 3 years ago
  A common mistake is not properly documenting your cryptocurrency holdings. It's important to keep records of your wallet addresses, transaction history, and any supporting documents related to your crypto investments. This documentation can help in case of an audit and ensure accurate reporting.
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• Nov 26, 2021 · 3 years ago
  One mistake to avoid is relying solely on automated tax software without reviewing the results. While these tools can be helpful, they are not foolproof. Take the time to review the generated reports and double-check for any errors or missing transactions. It's always a good idea to have a human eye review your tax filings.
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• Nov 26, 2021 · 3 years ago
  Avoid the mistake of not seeking professional help when needed. Crypto taxes can be complex, especially if you have a large number of transactions or unique circumstances. Consulting with a tax professional who specializes in cryptocurrency can help ensure compliance and minimize your tax liability.
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• Nov 26, 2021 · 3 years ago
  Lastly, don't wait until the last minute to start preparing your crypto tax filings. Gathering all the necessary information and calculating your tax liability can take time, especially if you have a significant number of transactions. Start early and give yourself enough time to accurately report your crypto activities.
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• Nov 26, 2021 · 3 years ago
  Remember, accurate tax reporting is crucial when it comes to cryptocurrencies. Avoid these common mistakes and consult with a tax professional or use reliable tax software to ensure compliance with the IRS regulations.
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