There’s a New Free Service for Compiling Tax Data to Report Crypto and NFTs
If you traded, bought or sold cryptocurrency or non-fungible tokens (NFTs) in 2021, now is the time to familiarize yourself with the tax rules ahead of the Jan. 24 start of this year’s tax filing season. The good news is, a new service can make the process a lot easier this year than in the past.
That news should bring a sigh of relief to digital asset investors who have a hard time navigating the rules on what they should report to the IRS. The Biden administration and other federal government officials are working on new tax policies governing crypto and NFTs, but it’s still a work in progress — especially for NFTs.
Further complicating matters is that most cryptocurrency exchanges haven’t provided investors with a 1099 — or any other form — that accurately reports gains and losses from transactions entered for a given year, Forbes reported. The process of calculating basis, gains and losses has often been confusing and costly for crypto investors.
That will change with this week’s announcement that TaxBit has a new network available. TaxBit aims to provide free and unlimited federal information returns that cryptocurrency and NFT investors can use for transactions conducted on exchanges that belong to the TaxBit Network.
The new network will offer users of supported TaxBit Network companies the option to receive a free 2021 tax information form — including IRS Form 8949, which is required to report property exchanges, sales and dispositions. Income report forms will also be available.
Platforms to Incorporate TaxBit via Sign-Up Process
Along with the launch of the TaxBit Network, many participating platforms will incorporate a free, one-click TaxBit sign-up within their native applications to further simplify access to 2021 tax forms and provide year-round access to TaxBit software, the company said on its website.
As CNBC reported, the passage of the $1.2 trillion Infrastructure Investment and Jobs Act calls for mandatory yearly tax reporting from digital currency brokers starting in January 2023. For now, investors are required to disclose yearly cryptocurrency activity by checking a box on their tax returns. But there is confusion about which transactions to report.
The new TaxBit network should help ease some of that confusion.
“TaxBit solves a critical challenge for our clients, cryptocurrency investors and digital asset companies, through increasing consumer confidence, which is a win for the industry at all levels,” Kane Capital Group CEO Thomas Kane told Forbes. “Cryptocurrency investors of all magnitudes will be provided an element of standardization for the tax reporting process where there is not a clear precedent. These types of services are essential to retail and institutional investors as U.S. lawmakers determine how to best implement a regulatory framework for this industry.”
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