When to contact a tax expert: Most “corner tax experts” will not have expertise in dealing with digital currency, Cross said.

Most other exchanges should provide a record of transaction - sometimes to the exact second it happened - but it’s not guaranteed. It is an option to download transactions on Coinbase into an Excel spreadsheet, but it can be buggy. On Coinbase, the most popular U.S.-based exchange, it lists how much a user paid for the bitcoin, additional fees incurred, date purchased and what the cost of bitcoin was during the transaction. The first step is to get a record of your bitcoin transactions. Personally, I don’t think it’s worth it.”įirst step: If you sold bitcoin at any time last year, you need to file Form 8949 to report capital gains. “You are taking a chance the IRS won’t catch you. “If you fail to report gains, that could be tax fraud,” Cross said. If any crypto purchases were tied to a bank account, that will make it especially easy to find, he said. But, Tyson Cross, a tax attorney who started studying bitcoin in 2013 while working in San Diego, said it might not be worth it to try and hide it. Conventional wisdom among some bitcoin owners is that it is difficult for the Internal Revenue Service to find out if you own bitcoin, litecoin or any other digital currency if you traded less than $20,000. Why file taxes: It is against the law not to include cryptocurrency on taxes in the United States. In the case of bitcoin, that even means reporting when you used the digital currency to buy a coffee. When it comes to digital currency, it is up to the investor to track down exactly what happened. It is now tax time and federal rules for reporting earnings or losses can be tricky. If you invested in bitcoin last year, as many people did, the start of 2018 has been rough as the prices continued to drop.

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