The IRS considers cryptocurrency as property, buying, selling, or exchanging cryptocurrency has to report in taxes including your capital gains and losses at form 8949.
File Form 8949, Report Crypto On Taxes – Here’s How (PHOTO: USA Today)
Do I have to pay crypto taxes?
Yes, digital asset-related income has to be reported. IRS issued Notice 2014-21 explaining that IRS treated cryptocurrencies as “property,” just like stocks, bonds, or gold. If you sell cryptocurrencies should be filed on crypto taxes, also known as capital gains or losses. You’ll report these on Schedule D and Form 8949 if required. Moreover, earning money as a freelancer, independent contractor, or gig worker but were paid with cryptocurrency or for crypto-related activities, then you might be self-employed and need to file form Schedule C.
Reporting crypto activity can require a lot of crypto tax forms depending on the type of transaction and the type of account. These crypto tax forms are important for you to know in case you will be needing them soon, including Form 1040, Schedule D, Form 8949, Schedule C, or Schedule SE to report your crypto activity.
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Form 8949
Filing form 8949 along with Schedule D when you need to report extra information about your sale or exchange of capital assets like real, stocks, bonds, estate, and cryptocurrencies. You can file as many Forms 8949 as needed to report all transactions. Additional information such as adjustments to the cost of an asset or expenses that you incurred to sell it has to be reported as well. Form 8949 can also be used to report the sale of assets that were not reported to the IRS on form 1099-B by your crypto platform or brokerage company or if the details reported need to be corrected. Once you list all of these transactions separately on Form 8949, you then you can enter their total value on your Schedule D.
Lastly, all of these FAQs apply only to taxpayers who possess virtual currency as a capital asset. For further information on the definition of a capital asset, examples of what is and is not a capital asset, and the tax treatment of property transactions generally, visit Publication 544, Sales and Other Dispositions of Assets.
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