TurboTax software is the number one choice for people looking for an easy and reliable way to prepare their taxes for the following season. This software is a market leader in the niche. It provides an easy-to-use, customizable, data-rich, state-of-the-art solution, even for people who use it for the first time.
The features provided by TurboTax software are precious to individual taxpayers. Crypto investors will appreciate its partnership with TokenTax and other similar apps. It eases the form filling a lot. This software also simplifies the process of completing federal and state income tax returns.
Is Crypto Gain Taxable?
Those who enter the Bitcoin world for the first time may be confused by the tax requirements. If you trade coins within the last 12 months, the IRS sees that as a short-term capital gain. If you hold cryptocurrencies for more than a year, it will be marked as long-term capital gain and charged by lower rates.
In order to avoid inconveniences and even penalties, it’s recommended to do calculations with the help of software. It’s similar to reporting any other gain. You’ll have to report any sale, purchase, and conversion. And all these are taxable.
You are obliged to keep track of all crypto transactions you made in a tax year. You can simply ask for a trading history from the exchange website. As there can be some limits on how far back you can get this information, you should download this report several times a year.
As your Bitcoin IRA transactions are under the watchful eye of the IRS, you can expect to receive 1099 forms. That way, you officially report your earnings or gain in crypto money. Check with your custodian or the IRS directly if you didn’t get this form.
Get Crypto Tax Report
You will buy Bitcoin or other coins at crypto exchanges. When you register for one of them, you have the option to connect software to make crypto tax calculation easier. For now, TokenTax is the only specialized calculator that connects to every crypto exchange. But you can use Bitcoin. Tax, BitTaxer, or any other specialized software.
If you wonder how to file Bitcoin taxes TurboTax, using these apps is the easiest way to get a detailed report of your transactions. The software tracks all gains and losses and estimates tax liability for every currency transaction. Eventually, you will generate a report in just a few clicks.
With TokenTax, you can easily switch to TurboTax by creating a TurboTax CSV in the Documents section. After selecting a button related to cryptocurrencies, you’ll proceed to the Wages & Income screen.
Reporting Your Transactions
In Wages & Income, you will enter all recorded transactions related to Bitcoin or any other digital currency. After confirming that you were trading coins in the last tax year, you have to click on the TokenTax icon. It will lead you to the page where you’ll upload your crypto report file.
The following process will depend on the number of transactions that your crypto tax report contains. If you do not exceed the limit of 2251 transactions, you will get a finished report in a matter of minutes. But if you have more, the application will reject your file. That doesn’t mean you should stop there or that there is a problem. Simply, this situation is resolved in a slightly different way.
Solution for a Large Number of Transactions
If you have used TokenTax, the software simply doesn’t have an algorithm to calculate returns for more than 2251 transactions. The solution is to either print and physically mail your report to the IRS’s office in your state or to somehow cut the number of lines.
The first option is not quite handy, as it can require even a few thousand papers. Luckily, some apps allow you to condense your tax report and thus create an attachable file. For that, you can use software like Bitcoin. Tax. It allows you to group all your short-term and long-term gains and losses. That will turn all those lines into just two.
Finally, you just have to enter these sum values into TurboTax, and you’re all set. You can do that manually or by downloading the report from Bitcoin. Tax and then importing it into TurboTax. Just use the proper icon for Bitcoin. Tax software.
Mailing Report to IRS
As seen here, taxation is mandatory for many reasons. In some situations, the use of physical mail will be necessary. You can discuss this with your financial advisor or any tax professional. Then you can use the software from the previous paragraph, which will translate your transactions in a line or two.
Use an 8949 form from the IRS’s website. Enter only summarized short and long-term capital gains. If necessary, send extra details by mail. As for the form, fill only columns (d), (e), and (h). Then go back to Bitcoin. Tax app, click Reports tab, and download ‘Form 8949 Statement.’ You finally get a CSV file with all your entries. Print it off and send it to the IRS along with the form.
If you’re looking for a simple way to complete your taxes, then TurboTax could be the answer to your tax preparation problems. This software claims to be the most popular tax preparation system on the market, and its popularity continues to grow. Don’t get confused if you don’t succeed from the first shot. You can google a detailed explanation of software use and save a bunch of nerves.