Bitcoin Investors: How to Do Your Taxes Correctly
2017 was the year of Bitcoin for many people and, if you invested in the cryptocurrency during the past year, you need to make sure you report it correctly when filing your taxes. If you’ve already lost a chunk of money on your Bitcoin investment thanks to the recent downturn, you may not want to pay too much attention to it, but the regulations relating to cryptocurrency and taxes mean you will need to get into the nitty-gritty, like it or not.
Under federal law, it’s up to you to calculate your income or losses from your cryptocurrency investment, and it’s your responsibility to track down all the details.
How to Report Bitcoin and Other Cryptocurrencies in Your Taxes
If you’re one of those Bitcoin investors who feels that you don’t need to report it in your taxes as it’s anonymous and the IRS will never manage to find you, it’s time to think again. It’s illegal not to include your Bitcoin investment in your tax return, and it’s not nearly as impossible for the Inland Revenue Service to track you down as you may think. Is it really worth taking the risk of being convicted of tax fraud? Of course it’s not.
To keep yourself on the right side of tax law, here’s what you need to do:
- Complete and file Form 8949 to report any capital gains you’ve made from your Bitcoin or other cryptocurrency investments. To do this, you’ll need a record of all of your transactions, including the price you paid for the cryptocurrency, the date of purchase, date of any sales, and profit made when selling.
- Remember to include absolutely every transaction you used Bitcoin for. Tax law doesn’t only cover those times when you bought or sold Bitcoin for traditional currency, it also applies to using Bitcoin to buy a sandwich, coffee, or any other seemingly small and insignificant item. Of course, it applies to any big purchases too.
- Before you file your capital gains form, make sure to check the details and ensure you’re accurately reporting your cryptocurrency transactions.
Do You Need Help from a Fort Lauderdale Tax Attorney?
Taxes can be complex, particularly when you’ve been dabbling in the latest investment trends, such as Bitcoin and other cryptocurrencies. If you’re unsure about filing your taxes, or concerned about accidentally misreporting some aspect of your finances, you should seek assistance from an experienced, knowledgeable Fort Lauderdale tax attorney.
If you need assistance with any aspect of tax law, such as:
- Understanding your tax credits
- Making sure you’ve claimed all applicable deductions
- Filing electronically
- Contributing to your Individual Retirement Account
- Ensuring you have accurately reported all your income for the past year
A Fort Lauderdale tax attorney could be the ideal person to save you headaches and hassle from the IRS. Make sure you’re not making any mistakes that could come back to haunt you by scheduling an initial consultation and getting a Fort Lauderdale tax attorney on your team. To avail of our expertise, call us today on 754-201-3536.