Need help filing this tax season? 4 crypto questions to ask your tax advisor
Catch up on crypto tax basics with your Certified Public Account (CPA).
Given the explosion in crypto's popularity in the last year, there's a pretty good chance that you're confronting the tax implications of your investments, trades, and crypto experiments for the first time. But even if you aren't a newly minted hodler, crypto taxes can be tricky — which is why we all need to carefully consider the best ways to report gains, losses, and income. In fact, one of the very first questions on the U.S. 1040 Individual Tax Return Form is whether or not you transacted “virtual” currency of any kind.
First things first...
Coinbase doesn’t provide tax advice. This article represents our stance on IRS guidance received to date, which may continue to evolve and change. None of this should be considered as advice or an individualized recommendation, but it’s important to us that our readers have relevant information available to them in the most accessible way possible. Please consult a tax professional regarding your own tax circumstances.
Before you file...
Whether you’re going professional or venturing out alone, the very first step to take is collecting all of the documents and data you’ll need. If you use Coinbase, first check out the tax center where you can find reports on your gains, losses, and transactions.
It's important to note: The tax center on Coinbase only includes transactions you made using your Coinbase account. It won’t include activity from other platforms or Coinbase products, like Coinbase Wallet, Coinbase Pro, or Coinbase Prime.
To fill the gaps, you can try using a service like CoinTracker to aggregate your activity and get what you need to file.
When to seek help from a tax professional
Having the right forms and records ready is key, no matter how you file. But the more types of transactions you make, the more complex your tax situation can become. If you’re not sure how to accurately file your crypto taxes — or if you just don’t have the time to get into the nitty gritty of your transactions — you may want to work with a Certified Public Accountant (or CPA).
A few questions to ask your CPA
Whether you’ve spent, staked, or sold, crypto transactions are a relatively new type of financial activity. Even seasoned professionals may be unfamiliar with new — and sometimes changing — tax rules and regulations. So how do you know who to hire? To be confident a CPA can take care of you, consider asking them questions like:
Do you own any crypto? First-hand trading experience might inform their approach to your taxes.
Have you filed tax returns for other clients with crypto in their portfolio before? Past experience may mean they’re already familiar with crypto tax rules.
How would you treat crypto sales? Understanding their approach to calculating and filing capital gains and losses may help you choose.
How would you treat income I’ve earned in crypto? Same goes for income — a CPA may be familiar with different kinds of crypto income.
If you’ve found a trusted crypto-specialized professional (congrats!), these questions should be easy. But if you and your CPA are looking to get up to speed together, here are a few more resources: