As if the 2022 tax filing season couldn’t get any more complicated — with IRS rules changes and reconciling federal stimulus funds and credits — if you bought or sold cryptocurrency in 2021 you may have even more factors to consider when you file.
To make the process go more smoothly, gather all your paperwork before you file. Then, decide if you can file taxes on your own, perhaps with the help of do-it-yourself tax software, or if you need to call in professional help from a tax accountant.
Shehan Chandrasekera, head of tax strategy at crypto tax software company CoinTracker.io, told Time that if you don’t have a complex tax situation or complicated crypto trading history, you can probably manage it on your own. You can also rely on crypto tax programs to help you calculate your capital gains and losses on your crypto trading.
If you decide to hire a tax expert, you’ll want to ask the following questions to determine the specifics of your crypto tax situation — and to find out if the tax preparer has the knowledge you need to help you file correctly.
Will My Crypto Transactions Be Considered Taxable Income?
If you receive cryptocurrency as payment for goods or services, you must report the fair market value of the crypto at the time it was received as taxable income. Your tax accountant should be able to help you review your transactions and determine what counts as income.
Where Can I Find My Crypto Transactions and Their Fair Market Value at Time of Purchase?
Your transaction history may vary depending on the exchange you use or how you acquired the cryptocurrency. A knowledgeable tax accountant should be able to show you how to gather the date, cost basis, sale value and transaction fees for each crypto purchase or sale.
What Should I Do if I Haven’t Been Reporting My Crypto Investments?
You have three years from the date you filed your return to file an amended return, so it may not be too late to get caught up on reporting your crypto transactions to the IRS.
Some tax preparers will review your returns from past years and help you file an amended return for free if you are a new client. It pays to ask if they will help you file your amended returns for free — especially if you don’t have a lot of transactions — or to ask how much it will cost to have them file your amended returns reflecting your crypto income or capital gains.
The IRS will be reviewing crypto transactions more carefully moving forward, Time reported, so be sure you are filing an accurate return.
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