Do I need to file taxes for Crypto?… Yes. Yes you do.
The number one burning question on many crypto trader’s minds is: do I need to file taxes for crypto? Simply put, the answer is yes.
But I never exchanged it back into fiat, I only kept it in crypto!… Still yes.
The government hasn’t even given us the rules on how to do it yet! Shouldn’t I wait?… Can’t really argue with you there, but no, you should still file. This particular reason is why we here at The Coin Boys, a cryptocurrency podcast, contacted Zac McClure with TokenTax.co and he was able to give us a little insight to what’s going on. You can take a listen to the episode here.
Regardless of how you feel about taxes, the truth is Bitcoin, Ethereum, and all other Cryptos will not be adopted unless governments can somehow get their cut. So it’s better to be safe than sorry. The question is, what should we be doing now to prepare for taxes?
There are two major things you should do.
One is get all of your data. At least through the end of 2018… Just in the last few days we’ve seen Luiqy go down, we’ve seen Quadriga go down… Get your data for 2018 as soon as you can because, trust me, when you’re missing data for one exchange it makes your taxes exponentially harder.
…The Second thing is, understand that if you’re holding crypto at a loss, you can sell it now… Harvest those losses. Be strategic… If you bought some alt coin, and you put $10,000 in it and now it’s worth $500, well if you just hold it forever that never turns into anything good for you. YOU have to actually sell it to realize that loss.Zac McClure, CEO TokenTax.Co on The Coin Boys Podcast.
Zac also emphasized that it is best to hold onto these records until the rules become clear. At some point they will be clear and you can go back to amend your taxes. It’s better to show that you tried to do your taxes as opposed to doing nothing at all.
TokenTax takes the approach that crypto is a security, but that doesn’t mean you have. Just be sure you have your records to prove your reasoning for why you are filing the way you choose to file.
The unfortunate truth is, unless you are a tax expert you are definitely going to need some help here. It will be worth it in the end. The one great benefit to TokenTax is that they can help you figure out how to get your records for free on their website. Just choose the “Exchanges” button at the top menu and then choose your exchange. They have simple and easy instructions for each exchange.
Once that’s done, much like your private keys, do not lose those records. There is a high likelihood that even after filing this year, you will need to amend them. If the company you choose to do taxes with is prepared like TokenTax is, then that process will be far less painless.
We hope we made it clear here, file your taxes! But, should you have any additional questions, comments, or tax concerns, let us know after listening to the podcast by emailing us here. We will possibly do a follow up episode closer to the April 16th deadline.
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