All Things Tax

All Things Tax

Like the title says, from the filing process and tax questions to tax policy and reform, you can search and share All Things Tax here. This is the place to find answers to all your general questions that don't fall under the other categories. And just a reminder: questions about software or online filing should be posted in DIY Products.

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Pioneer
Posts: 2
Registered: ‎01-02-2018

Cryptocurrency new taxes, I have a few questions.

I've purchased some coins with usd and haven't traded them or anything.  Do I pay a tax on them?  

 

I was gifted some coins as well, do I pay tax on that?

 

Lastly, I did a few trades during November and December.  I know those are taxable.  Will an H&R Block representative help me in person if I go to a nearby office?  Thanks ahead of time.

Tax Pro
Posts: 6,070
Registered: ‎02-23-2016

Re: Cryptocurrency new taxes, I have a few questions.

Hi xkryptonite,

 

 

 

 

Welcome to the H&R Block community.

 

Crypto currency is an investment instrument just like a stock or a bond.  You only pay tax if you realize a gain.

 

The recipient of a gift never owes tax on the gift.

 

If you haven't done anything with the coins you bought then you will not owe tax.

 

If you had a gain on the trades then yes you will have some taxable income.  You can either go to an office or you can complete your tax return online yourself which is usually less expensive.  You'll need at least the premium software because you will need Schedule D.  Trades are reported on Form 8949/Schedule D.

 

 

If you have any other questions I'll be glad to help.

 

Louis,

Senior Tax Advisor (Tampa, FL)

Pioneer
Posts: 2
Registered: ‎01-02-2018

Re: Cryptocurrency new taxes, I have a few questions.

Hi Louis,

 

Thanks for the reply, would I pay tax on the gain(s) on the same date of the trade only?  I haven't converted any of the trades back to fiat yet.

Tax Pro
Posts: 6,070
Registered: ‎02-23-2016

Re: Cryptocurrency new taxes, I have a few questions.

You're quite welcome.

 

 

 

You'll see on Schedule D that it's whatever your net gain is for the year that you pay tax on.  If you have some gains and some losses for instance then your net gain will be your total gains less your total losses.  If you have nothing but gains for the year, then it will be whatever your total gain for the year is that you pay tax on.

 

In other words, each time you trade the gain you earn is added to your gains for the year.  If you end a trade with a loss then you have a loss added into the loss stack.  They net at the end of the year to determine whether you have a gain or a loss.  Whether or not you use a gain to buy more coins (reinvest) it still counts as a gain.  The same is true for stocks, etc.

 

Usually gains and losses are reported to you on Form 1099-B at the beginning of February but since crypto currency trading is much newer to the world I would advise you to do your best keep track.  I would imagine you can see all of your gains and losses in your trading account.

Trusted Pioneer
Posts: 5
Registered: ‎02-22-2016

Re: Cryptocurrency new taxes, I have a few questions.

Hi Louis,

 

If I didn't make any profits/gains in crypto currency trading, do I need to still report all the crypto trades to IRS when I file taxes ? Just wondering why IRS will be interested in my trades, If I haven't made any profits/gains to begin with.

 

Thanks,

Sunil

Trusted Pioneer
Posts: 5
Registered: ‎02-22-2016

Re: Cryptocurrency new taxes, I have a few questions.

In other words, If I have nothing but losses for the year, do I need to still report all the crypto currency trades that I did to IRS when I file taxes.

 

 

Thanks,

Sunil

Tax Pro
Posts: 6,070
Registered: ‎02-23-2016

Re: Cryptocurrency new taxes, I have a few questions.

sunilhere,

 

 

 

Yes.

 

Not only that, you should report your trades even if you didn't have to because just like with any other investment instrument if you have a loss on Schedule D after offsetting your gains (if any) the first $3,000 of the overall loss will carry to your 1040 and reduce your taxable income.

Trusted Pioneer
Posts: 5
Registered: ‎02-22-2016

Re: Cryptocurrency new taxes, I have a few questions.

[ Edited ]

Hi Louis,

 

Thanks for the response/information. Appreciate it.

 

Thanks,

Sunil

Tax Pro
Posts: 6,070
Registered: ‎02-23-2016

Re: Cryptocurrency new taxes, I have a few questions.

You're quite welcome.

Highlighted
Pioneer
Posts: 1
Registered: ‎01-11-2018

Re: Cryptocurrency new taxes, I have a few questions.

Hi Louis,

 

I have coins in an exchange wallet and want to transfer out to a desktop wallet for long-term investing. Would the price at the time of transfer have to be reported, and would it be taxable? I would not be selling it for fiat or for other coins so I hope it is not considered a taxable event. 

 

Thanks,

Jesus