What are the common mistakes made by cryptocurrency investors when completing the 8949 form instructions?

GSM Умный домApr 05, 2022 · 3 years ago7 answers

What are some common errors that cryptocurrency investors often make when they are filling out the 8949 form instructions for reporting their transactions?

Cryptocurrency

Investors

8949 Form

7 answers

Apr 05, 2022 · 3 years ago
One common mistake that cryptocurrency investors make when completing the 8949 form instructions is failing to report all of their transactions. It's important to remember that every buy, sell, trade, or conversion of cryptocurrency needs to be reported. Even if you think a transaction is too small or insignificant, it still needs to be included on the form.
Apr 05, 2022 · 3 years ago
Another mistake is not keeping accurate records of their transactions. It's crucial to maintain detailed records of every cryptocurrency transaction, including the date, time, amount, and value. Without accurate records, it can be difficult to accurately report your gains or losses on the 8949 form.
Apr 05, 2022 · 3 years ago
At BYDFi, we often see investors make the mistake of not properly categorizing their transactions. The 8949 form requires different categories for short-term and long-term transactions, and it's important to correctly classify each transaction. Failing to do so can result in errors on the form and potential penalties from the IRS.
Apr 05, 2022 · 3 years ago
Some investors also forget to account for fees and commissions when calculating their gains or losses. It's important to include any fees paid to exchanges or brokers in your calculations. These fees can significantly impact your overall tax liability.
Apr 05, 2022 · 3 years ago
One common mistake that investors make is not seeking professional advice when completing the 8949 form instructions. Cryptocurrency taxation can be complex, and it's always a good idea to consult with a tax professional who is familiar with the latest regulations and guidelines.
Apr 05, 2022 · 3 years ago
Another mistake is rushing through the form without double-checking for errors. It's important to carefully review your completed form for any mistakes or omissions before submitting it. Simple errors can lead to delays in processing or even trigger an audit.
Apr 05, 2022 · 3 years ago
Lastly, some investors mistakenly believe that they can avoid reporting their cryptocurrency transactions. However, the IRS has made it clear that cryptocurrency transactions are subject to taxation, and failure to report them can result in penalties and legal consequences.