Left your crypto tax to the last minute? Here’s how to get it done in less than 24 hours.

You might be procrastinating, but the IRS sure ain’t wasting any time. They’ve made it clear that crypto taxes need to be filed alongside your annual tax return by the 18th of April 2022 - or penalties abound. If you haven’t yet started, you’re possibly thinking crypto tax is mission impossible. And you’re right - if you try and do it yourself that is. Instead, follow 5 steps to file your tax returns in 1 day only. 

If you invested in crypto in 2021, regardless of how large your gains or losses are, you still need to report your crypto investments to the IRS, and fast. You’ve got until the 18th of April 2022 to calculate, report and file your crypto taxes alongside your annual tax return.

The bad news? Calculating crypto tax isn’t easy if you’ve got a lot of transactions. Worse yet, the IRS expects you to report every sale, trade or spend of crypto you’ve made throughout the entire year, as well as any income from the likes of airdrops, staking and mining. 

To calculate your crypto taxes, you’ll need to:

  • Calculate your cost basis or the fair market value (FMV) of any crypto in USD on the day you received it.
  • Identify each taxable transaction.
  • Identify which tax would apply to each taxable transaction (Income Tax or Capital Gains Tax).
  • Calculate your capital gains and losses from each disposal of crypto, including separating short-term and long-term capital gains and losses.
  • Calculating the FMV of any crypto income in USD on the day you received it. 

It’s a lot of work. For active investors in the DeFi market or anyone using trading bots, you could be looking at thousands of transactions in a single financial year.

 Worse still, the IRS reporting requirements are substantial. You need to report every single disposal of crypto - so every time you’ve traded, sold or spent crypto. You’ll need to include your cost basis, the date of the transaction, your proceeds, your capital gain/loss and more for every single transaction. As well as this, you’ll need to report any additional income from crypto separately.  

Remember, all of this is due before the 18th of April 2022.

Don’t panic if you’ve left it all to  the last minute. Use Koinly’s crypto tax calculator  to save yourself hours of spreadsheets and calculations in five simple steps:

    1. Connect all your wallets, exchanges and blockchains to Koinly. Connect and import your transaction history for every wallet, exchange or blockchain you use via API or by uploading a CSV file of your transaction history. Koinly supports more than 600 platforms!

    2. Sit back and let Koinly do the calculations. Koinly will go through your entire transaction history, identifying your cost basis or the fair market value of your crypto for each. It’ll identify each taxable transaction and calculate your capital gain or loss, as well as identify the fair market value of any crypto income on the day you received it.

  • Download your crypto tax report. Download the tax report you need, when you need it. Koinly supports users around the world with our Complete Tax Report, which you can use to make filing your crypto taxes simple. For US investors, Koinly can generate IRS forms like Form 8949 and Schedule D, as well as tax reports for the tax app you’re filing with, like the TurboTax Online Report.

  • Use your crypto tax report to file your preferred way. Post your forms, upload your crypto tax report to your tax app like TurboTax or TaxAct or give your accountant access to Koinly to let them do the rest for you. However you prefer to file, Koinly can help.

  • Relax - you’re done for another year. 

If you’d like to learn more about how crypto is  taxed - check out Koinly’s ultimate US crypto tax guide.

© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.