If you disposed of cryptocurrency during the tax year, you must report gains and losses on IRS Form 8949. This guide provides step-by-step instructions to streamline the process, especially for traders using multiple wallets or exchanges.
Which Tax Forms Are Used for Cryptocurrency and NFTs?
In the U.S., cryptocurrency is taxed as:
- Capital gains/losses (reported on Form 8949 for disposals like sales, trades, or purchases).
- Ordinary income (reported on Schedule 1 for earnings like staking, mining, or rewards).
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Who Must File Form 8949 for Crypto?
Report transactions if you:
✔ Made a profit/loss selling/trading crypto/NFTs.
✔ Used crypto to buy goods/services.
Exception: Trades in a crypto IRA (tax-advantaged accounts) are exempt.
How to Complete Form 8949: 6-Step Guide
Step 1: Identify All Disposal Events
Track every disposal (sales, trades, purchases) across wallets/exchanges.
Step 2: Gather Transaction Details
For each disposal, collect:
- Asset description (e.g., "1.5 BTC").
- Acquisition/disposal dates.
- Proceeds and cost basis.
- Gain/loss amount.
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Step 3: Categorize as Short-Term or Long-Term
- Short-term: Held ≤12 months (higher tax rates).
- Long-term: Held >12 months (lower rates).
Step 4: Select the Correct Checkbox
On Form 8949, choose:
- (C) If no 1099-B was issued (common for crypto).
- (A/B) If you received a 1099-B (rare).
Step 5: Report Transactions on Form 8949
Example for a BTC sale:
| Description | Acquired | Sold | Proceeds | Cost Basis | Gain/Loss |
|------------|----------|------|----------|------------|-----------|
| 1.5 BTC | 01/10/23 | 03/15/24 | $45,000 | $30,000 | $15,000 |
Note: Separately report "collectible" NFTs (28% tax rate).
Step 6: Transfer Totals to Schedule D
Sum net gains/losses from Form 8949 and report on Schedule D.
FAQs
Q1: Do I need Form 8949 if I received a 1099?
Yes. Even with a 1099, you must file Form 8949. Verify accuracy—exchanges may miss cost basis data.
Q2: What if I didn’t get a 1099 but sold crypto?
Still required. All disposals must be reported to avoid penalties.
Q3: How to import Form 8949 into TurboTax?
Tools like CoinLedger generate import-ready reports. Learn more here.
Q4: What if I exceed TurboTax’s transaction limit?
Attach a consolidated summary to Form 8949 and mail detailed records to the IRS.
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