If you disposed of cryptocurrency during the year, you’re required to report your gains and losses on Form 8949.
Unfortunately, filling out the form can take serious time and effort — especially if you’ve used multiple wallets and exchanges during the tax year.
In this guide, we’ll share everything you need to know about Form 8949 before you get started filing your taxes. We’ll also break down step-by-step instructions on how to report your cryptocurrency disposals on your tax return.
How is cryptocurrency taxed?
Before we discuss the specifics of Form 8949, let’s review the basics of cryptocurrency taxes.
Cryptocurrency is considered property and is subject to
and income tax. capital gains Capital gains tax: If you dispose of cryptocurrency, you’ll incur a capital gain or loss depending on how the price of your crypto has changed since you originally received it. Income tax: If you earn cryptocurrency, you’ll recognize income based on the fair market value of your crypto at the time it was received.
For more information, check out our
. complete guide to how cryptocurrency is taxed What tax form should I use to report cryptocurrency?
In the U.S., cryptocurrency disposals are reported on Form 8949. Your net capital gain or loss should then be reported on Schedule D.
Other cryptocurrency income can be reported on Schedule 1 or Schedule C depending on the specifics of your situation.
For more information, check out our
. complete guide to reporting crypto on your taxes Instructions on how to fill out Form 8949
Here’s a 6-step process on how to report your cryptocurrency disposals on Form 8949.
VIDEO Step 1. Take into account all of your disposal events
The first step to filling out your Form 8949 is to take account of every one of your cryptocurrency disposals during the tax year.
Remember, each one of your disposals across your wallets and exchanges need to be reported on Form 8949. Examples of disposals include selling your cryptocurrency, trading it for another cryptocurrency, or using cryptocurrency to purchase goods or services.
Step 2. Collect information on your cryptocurrency disposals
To report your cryptocurrency disposals on Form 8949, you’ll need the following information:
A description of the property you sold (ex. 1.5 BTC) The date you originally acquired the property The date you sold or disposed of the property Proceeds from your crypto disposal Your cost basis for purchasing the property Your gain or loss
If you haven’t kept accurate records of your proceeds and
for your crypto transactions, you may have trouble filling out Form 8949. If this is the case, you may want to consider using cost basis to generate a comprehensive tax report automatically. crypto tax software Step 3. Divide your transactions into short-term and long-term disposals
Form 8949 is divided into two sections: short-term and long-term. You should take note of which of your disposals fall into which category.
If you dispose of your assets after holding them for less than 12 months, they should be reported on the short-term section. If you dispose of your assets after holding them for more than 12 months, they should be reported on the long-term section.
Long-term disposals are subject to more favorable tax rates.
Step 4. Select the correct option
In both the short-term and long-term sections, you’ll need to select one of three checkboxes. Here are the options in Part I.
(a) Short-term transactions reported on Form(s) 1099-B showing basis was reported to the IRS
(b) Short-term transactions reported on Form(s) 1099-B showing basis wasn’t reported to the IRS
(c) Short-term transactions not reported to you on Form 1099-B
It’s most likely that you’ll select box C. At this time, most cryptocurrency exchanges do not send
to customers. However, if you’ve received Form 1099-B from an exchange, you’ll need to select box A or box B. Form 1099-B Step 5. Report your disposals on Form 8949
Now, you can get started recording your cryptocurrency disposals on Form 8949.
To better understand how to fill out the form, let’s take a look at a sample transaction history.
Here’s how Ben’s transactions would be reported on Form 8949.
Step 6. Report your net gain or loss on Schedule D
Once you’ve finished reporting your disposals on Form 8949, you are required to report your net short-term and long-term capital gains/losses on Schedule D.
If you have any
from prior years that you wish to carry forward, you can report them here. capital losses How to generate a Form 8949 with crypto tax software
Looking for an easier way to fill out Form 8949?
like CoinLedger can help. Crypto tax software
With CoinLedger, you can import your transactions from your exchanges and blockchains in minutes. Once you’re done, you can download completed IRS forms like Form 8949!
Get started with a free CoinLedger account today. Do I need to fill out Form 8949 if I received a 1099 form?
If you’ve traded cryptocurrency in the past year, you may receive
Form 1099 from one or more cryptocurrency exchanges.
At this time, there is no explicit guidance on which 1099 forms cryptocurrency exchanges are required to provide to their users. As a result, different exchanges issue different versions of 1099 forms, and some do not issue tax forms at all.
It’s important to remember that if you’re required to report your cryptocurrency disposals on Form 8949 — regardless of whether you received a 1099 form or not.
In addition, if you’ve
into or out of an exchange, your Form 1099 will likely have incomplete or incorrect information about your cost basis and/or proceeds. It’s wise to double-check these forms and not completely rely on their accuracy for your tax reporting. transferred cryptocurrency How can I add my cryptocurrency Form 8949 to TurboTax?
If you’re using TurboTax or TaxAct to file your tax return, CoinLedger can help you generate a cryptocurrency capital gains report that can be imported into either platform.
For more information, read our guides to
and TurboTax TaxAct imports. What should I do if I have too many transactions on Form 8949?
In some cases, platforms like TurboTax limit the number of transactions you can report on Form 8949.
Taxpayers have the option to report consolidated total amounts on Form 8949, and provide an attached report with all the detail that is required for Form 8949.
CoinLedger can help you generate a consolidated capital gains report you can import into your tax platform of choice. You can then mail in a detailed record of your cryptocurrency disposals to the IRS.
For more information, read our
. guide on how to mail in Form 8949 Get started with CoinLedger
Want to generate comprehensive
in minutes? CoinLedger can help. capital gains and income tax reports More than 400,000 investors around the world use CoinLedger to simplify the tax reporting process. With integrations to the world’s biggest exchanges, the platform can save you hours of effort during tax season. . Get started with a free account today Frequently asked questions
Let’s summarize what we’ve discussed by answering a few frequently asked questions about Form 8949.
Is cryptocurrency reported to the IRS?
Yes. Cryptocurrency is considered property by the IRS and can be subject to capital gains and ordinary income tax.
How do I report cryptocurrency on Form 8949?
All cryptocurrency disposals need to be reported on Form 8949. You are required to include cost basis, gross proceeds, and the date of receipt and disposal for each crypto-asset.
Is crypto reported on Schedule D?
Your net capital gain or loss from all sources (including cryptocurrency) should be included on Schedule D.
How much tax do I pay on Form 8949 transactions?
you pay on cryptocurrency disposals varies depending on several factors, including your income bracket and how long you held your crypto. tax rate Can I get a Form 8949 from Coinbase?
While Coinbase One subscribers can get a pre-filled Form 8949, this form only includes transactions from Coinbase — not your other crypto wallets and exchanges.