Disclaimer
The following information is provided completely Koinly and should not be considered as formal tax advice. The information is provided as-is at the date of publication, and given the fast-moving state of the crypto industry, may be subjected to changes in the future. CoinGecko is not responsible for the accuracy of the information, and for any consequences, intended or otherwise, arising from actions taken based on this article. For more information on crypto-taxes please visit Koinly or consult a licensed tax professional in your jurisdiction.
Got that overwhelming sense of doom from leaving your crypto taxes until the last minute? The IRS has made it clear that crypto taxes must be filed with your annual tax return by the 18th of April 2022. What happens if you don’t file your crypto taxes? Penalties - and big ones at that. Here’s how to get it done in five simple steps in time for the deadline.
Whether you made great gains or endless losses from crypto in 2021 - you still need to report your crypto investments to the IRS - and you need to do it now! You only have until the 18th of April 2022 to calculate, report and file your crypto taxes as part of your annual tax return.
If you’ve not calculated crypto taxes before… We've got some bad news for you. Calculating crypto tax is a mathematical nightmare. You’ll need to:
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Calculate your cost basis for each asset you’ve sold, traded or spent.
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Calculate the fair market value (FMV) of any crypto in USD on the day you received it for any crypto income.
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Identify each taxable transaction and the type of tax that applies (Capital Gains Tax or Income Tax).
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Calculate your capital gains or losses from each disposal of crypto, as well as separate those gains and losses into short and long-term capital gains and losses.
You’ll also need to figure out what kind of tax applies to your transactions and the IRS doesn’t exactly make this simple. They’ve released basic guidance saying that any time you sell, trade or spend crypto, you’ll need to pay Capital Gains Tax on any profit as a result of that transaction. The same guidance gives some examples where crypto would be subject to Income Tax instead - including mining, airdrops, and hard forks.
After this, it all gets a little less clear. You need to look at the current guidance and interpret how it applies to your current investments and figure out whether your trades are more akin to a capital gains transaction or income. For DeFi investors in particular, this step alone can take up hours of your time.
If you thought all that was bad, we’ve not even got to the reporting requirements yet. The IRS expects you to report every single sale, trade, and spend of crypto you’ve made in the 2021 tax year. For each disposal, you’ll need to report your cost basis, the date of the transaction, your proceeds, and your subsequent capital gain or loss for every transaction as a minimum. Even if you haven’t made a capital gain or loss - you still need to report the transaction. As well as this, you need to report the fair market value of any crypto income in USD on the day you received it.
Suffice to say - it’s a lot of work, especially with the tax deadline of the 18th of April 2022 looming.
If you’ve left it all until the last minute and you’re thinking there’s no way you’re getting it done in time - think again. Use Koinly’s crypto tax calculator to get your crypto taxes calculated and filed in five quick steps. Here’s how:
Step 1: Connect all your wallets, exchange accounts, and blockchain addresses to Koinly
Connect all the wallets, exchange accounts, and blockchain addresses you use to Koinly via API or by uploading your transaction history in a CSV file. Koinly supports more than 600 wallets, exchanges, blockchains, and more than 17,000 cryptocurrencies.
Step 2: Go get a coffee while Koinly does the maths
Once connected, Koinly will go through your entire transaction history, identifying the cost basis or fair market value of your assets, as well as calculating your short and long-term capital gains and any income. All this information is available in a simple tax summary, completely free of charge. It’s only when you want to download your crypto tax report that you’ll need to upgrade to a paid Koinly plan.
Step 3: Download a crypto tax report
Once Koinly has calculated your crypto taxes, go to the tax reports page to download your crypto tax report. Koinly has many crypto tax reports available to download depending on how you prefer to file, including Form 8949 and Schedule D, TurboTax Online and Desktop reports, as well as our Complete Tax Report with everything you need to know.
Step 4: File your crypto taxes how you usually file
Hand your crypto tax report over to your accountant, upload your report to a tax app, or even send your forms in by post. You can even give your accountant access to your Koinly account and let them do it all for you. However you prefer to file, Koinly can help.
Step 5: Breathe - 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.
Are you a visual learner? Watch our Video Guide instead!
CoinGecko's editorial team comprises writers, editors, research analysts and cryptocurrency industry experts. We produce and update our articles regularly to provide the most complete, accurate and helpful information on all things cryptocurrencies. Follow the author on Twitter @coingecko
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