What are the common mistakes to avoid when filing IRS Form 8949 for crypto investments?

9 answers

• Nov 24, 2021 · 3 years ago
  One common mistake to avoid when filing IRS Form 8949 for crypto investments is failing to report all of your transactions. It's important to include every buy, sell, trade, and transfer of cryptocurrency, even if it seems insignificant. The IRS requires you to report all cryptocurrency transactions, so make sure to keep accurate records and include them on your form.
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• Nov 24, 2021 · 3 years ago
  Another mistake to avoid is not properly calculating your gains and losses. When filling out Form 8949, you need to determine the cost basis and fair market value of each transaction. This can be tricky with cryptocurrency due to its volatility and the potential for multiple exchanges. Take the time to accurately calculate your gains and losses to avoid any discrepancies.
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• Nov 24, 2021 · 3 years ago
  At BYDFi, we recommend using a reputable tax software or consulting a tax professional to ensure you are accurately reporting your cryptocurrency investments. They can help you navigate the complexities of Form 8949 and ensure you are in compliance with IRS regulations. Remember, it's always better to be safe than sorry when it comes to taxes.
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• Nov 24, 2021 · 3 years ago
  One mistake that many people make is not keeping proper documentation of their cryptocurrency transactions. It's important to keep records of all your trades, including dates, amounts, and prices. This documentation will be crucial if you ever get audited by the IRS. So, make sure to keep track of your transactions and store them in a secure place.
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• Nov 24, 2021 · 3 years ago
  When filing IRS Form 8949 for crypto investments, it's important to avoid mixing personal and business transactions. If you use cryptocurrency for both personal and business purposes, make sure to separate those transactions and report them accordingly. This will help you avoid any potential issues with the IRS.
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• Nov 24, 2021 · 3 years ago
  One common mistake is not reporting cryptocurrency received as income. If you receive cryptocurrency as payment for goods or services, it is considered taxable income and should be reported on your tax return. Make sure to include this income on your Form 8949 to avoid any penalties or audits.
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• Nov 24, 2021 · 3 years ago
  Another mistake to avoid is not properly reporting cryptocurrency held in foreign exchanges. If you have cryptocurrency stored in foreign exchanges, you may have additional reporting requirements. It's important to familiarize yourself with the tax laws of the country where the exchange is located and report any necessary information on your Form 8949.
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• Nov 24, 2021 · 3 years ago
  When filing IRS Form 8949 for your crypto investments, it's important to double-check all the information you provide. Simple errors, such as typos or incorrect calculations, can lead to delays in processing your tax return or even trigger an audit. Take the time to review your form before submitting it to ensure accuracy.
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• Nov 24, 2021 · 3 years ago
  One mistake to avoid is not seeking professional advice when needed. If you're unsure about how to properly fill out Form 8949 or have complex cryptocurrency transactions, it's best to consult a tax professional. They can provide guidance tailored to your specific situation and help you avoid any costly mistakes.
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