Crypto Tax Questions ANSWERED w/ CoinLedger
When to Start Preparing Your Crypto Taxes
As tax season approaches, now is the time to start gathering all your crypto transaction data and preparing your taxes. With the complexities of crypto taxes, you'll want to give yourself plenty of time to collect information from exchanges, wallets, DeFi platforms, NFT marketplaces, and anywhere else you've transacted with crypto. Getting organized early will make the process less stressful.
Tracking Your Cost Basis
One of the most important things you'll need to calculate is your cost basis for each crypto - that's the amount you paid when you acquired it. This forms the basis for calculating any capital gains or losses when you later dispose of that asset. Good record keeping is key. Using a platform like CoinLedger can automatically track cost basis across wallets and platforms.
Reporting Income from Crypto
In addition to capital gains and losses from trading and selling crypto, other crypto activities like staking, mining, airdrops, and lending can generate ordinary taxable income. The fair market value of rewards and airdrops at the time you receive them gets reported as income. Make sure you have records of these events.
Preparing for Audits
With increasing IRS scrutiny around crypto taxes, there's always a small chance of being audited. If selected, you'll need to provide comprehensive records that support the gains, losses, and income reported on your tax forms. Having clean, exportable reports from your tracking software can help streamline this process in case of an audit. Getting your crypto taxes right from the start helps avoid headaches down the road.
Guest: David Kemmerer, CEO & Co-Founder - CoinLedger
This episode is sponsored by CoinLedger
Use code "CRYPTOTAX10" for an instant discount!