You do need to report it. Generally, crypto exchanges don't issue 1099-B forms, but you are still required to report your crypto trades and exchanges. Answer Yes to the virtual currency question and enter the sale in the Investments section.
Answer NO to the Did you receive a 1099 for this sale? question. You will need the purchase date and amount you paid (basis) for the crypto and the sale date and amount you received (proceeds). TurboTax will calculate the capital gain or loss and report it on your tax return. You will get a tax break if you have a net capital loss, see below.
Cryptocurrency is taxed when you receive it as payment or have a transaction where you sell or trade it. If you just buy it and hold onto it, it won’t be taxed until you do something with it. Even if you don't receive a 1099-B, 1099-MISC, 1099-K, or summary tax statement for your cryptocurrency transactions, it’s your responsibility to report them.
Tax Tips for Bitcoin and Virtual Currency
Your total capital gains for the year minus your total capital losses results in either a net capital gain or a net capital loss.
- Short term capital gains (gains on assets held one year or less) are taxed as ordinary income.
- Long term capital gains (gains on assets held more than one year) are taxed at a more favorable rate than ordinary income.
- Net losses are deductible, but only up to a maximum of $3,000 ($1,500 if married filing separately). Any capital losses you couldn't deduct this year can be carried forward and deducted on future tax returns. This is called a capital loss carryover.
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