Use this tool that I use to file my cryptocurrency taxes.
As 2023 is over, cryptocurrency investors need to look ahead to their tax returns especially if you sold or traded any cryptocurrencies. Tax rules haven’t changed significantly so be prepared to pay the I.R.S. if you sold anything.
Tax laws have not changed significantly since the I.R.S. started to track digital currencies.
According to the I.R.S., a cryptocurrency traded or sold for real currency may be recognized as a gain.
The I.R.S. states:
When you sell virtual currency, you must recognize any capital gain or loss on the sale, subject to any limitations on the deductibility of capital losses.
According to the I.R.S., a digital asset is considered:
Convertible virtual currency and cryptocurrency
Stablecoins
Non-fungible tokens (NFTs)
So if you sold Bitcoin (BTC), Ethereum (ETH), or another cryptocurrency for fiat currency, that may be considered a gain according to the I.R.S. if you made a profit.
For example, if you bought Bitcoin when it was priced at $14,000 and sold it when it was $20,000. You would owe the I.R.S. for the $6,000 gain.
Of course, a lot depends on your tax filing status and other figures you used when you filed your taxes.
For the past three years, I have used Coin Ledger, which has been used by many well-known cryptocurrency investors. The platform used to be called Crypto Trader when I first filed my taxes. Coin Ledger takes the guesswork out of figuring out if you owe money based on your cryptocurrency trades.
Using this system is very easy. You’ll gather information from the cryptocurrency exchange you use, input the information in Coin Ledger, and then the system does all the work for you.
Whether you use a tax accountant or file on your own, it is not hard to use this tool. Coin Ledger works with Turbo Tax, Tax Act, and other platforms if you file your taxes.
