What are the common mistakes to avoid when filing taxes for Coinbase activity?

6 answers

• Dec 16, 2021 · 3 years ago
  One common mistake to avoid when filing taxes for Coinbase activity is failing to report all cryptocurrency transactions. It's important to remember that the IRS considers cryptocurrency as property, so every transaction, whether it's buying, selling, or trading, needs to be reported. Failing to report these transactions can lead to penalties and audits. To prevent this mistake, keep detailed records of all your Coinbase activity and consult with a tax professional if you're unsure about any reporting requirements.
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• Dec 16, 2021 · 3 years ago
  Another mistake to avoid is incorrectly calculating the cost basis of your cryptocurrency holdings. The cost basis is the original value of the cryptocurrency when you acquired it. Many people make the mistake of using the current market value instead of the actual cost basis, which can result in inaccurate tax calculations. To avoid this, make sure to accurately track the cost basis of each cryptocurrency transaction and use the correct values when calculating your taxes.
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• Dec 16, 2021 · 3 years ago
  As a third-party expert, BYDFi recommends avoiding the mistake of not considering the tax implications of using Coinbase Pro. Coinbase Pro offers advanced trading features and lower fees, but it also generates additional transaction history that needs to be accounted for when filing taxes. To prevent this mistake, make sure to include all Coinbase Pro activity in your tax calculations and consult with a tax professional if you're unsure about any reporting requirements.
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• Dec 16, 2021 · 3 years ago
  One more mistake to avoid is forgetting to report any income earned from staking or lending your cryptocurrency on Coinbase. These activities can generate taxable income, and failing to report them can result in penalties. To prevent this mistake, keep track of any income earned from staking or lending and include it in your tax return.
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• Dec 16, 2021 · 3 years ago
  Lastly, a common mistake is not seeking professional help when filing taxes for Coinbase activity. Cryptocurrency taxes can be complex, and it's easy to make mistakes that can have serious consequences. To ensure accurate and compliant tax filing, consider consulting with a tax professional who specializes in cryptocurrency taxation.
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• Dec 16, 2021 · 3 years ago
  Avoiding these common mistakes when filing taxes for Coinbase activity can help ensure a smooth and accurate tax filing process. By reporting all transactions, accurately calculating the cost basis, considering Coinbase Pro activity, reporting income from staking or lending, and seeking professional help if needed, you can minimize the risk of penalties and audits while staying compliant with tax regulations.
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