Crypto losses over several years

[ET17]

Hello,

I've been trading crypto for the last three years and decided to sell all of them in 2020. I've never reported any transaction in the last three years (my mistake) but experienced only losses each year. I'd like to report the overall loss from when I started to trade crypto (3 years ago) to last year when I sold all of them. I understand I can use the help of tokentax to produce a form 8949 for the transactions made in 2020 but what about the transactions I made before in 2019 and 2018?

Thanks for you answer.

[AmyC]

You can amend 2018 and 2019. To get a refund, you will need to file the 2018 by April 15, 2022.

Once your return is accepted and the finances are settled, you can file an amended return. 

• Save a copy of the original return before doing an amended return. See: 
  • how to file an amended return.
  • I need to amend my state return.
  • Can I e-file my amended state return?
  • Can I e-file my 1040X to amend my return?
• Pay additional tax. Taxpayers who will owe more tax should file Form 1040-X and pay the tax as soon as possible to avoid penalties and interest. They should consider using IRS Direct Pay to pay any tax directly from a checking or savings account for free.
• Use separate forms if amending more than one tax year.
  • Each year on its own form
  • Each year in its own envelope
• Track amended return status online. Taxpayers can track the status of their amended tax return in English and Spanish using Where’s My Amended Return?  Amended returns take up to 16 weeks to process and up to three weeks from the date of mailing to show up in the system.

[ET17]

Hello,

Thank you for your response. I have losses over $3,000 for 2018 and 2019, can I use the carry over tax benefit? If yes, should I first file the amendments to 2018 and 2019 before filing my tax return for 2020 so I can use the tax deduction benefit from the carry over on my 2020 tax return?

[Cynthiad66]

You have to amend the 2018 and the 2019 prior to claiming any losses because you have to compute to see if the losses were used in the year they were created.  

Create the amended for 2018 first so that it will flow to 2019 which will then roll to 2020, if applicable.  Good thing is that TurboTax will allow you to amend Free if the original return was filed with TurboTax

If your e-filed return was rejected (you got a specific reject code), go here instead.

Looking for a prior year return? Go here. 

You can amend e-filed returns if they've been accepted; paper-filed returns may be amended once they've been mailed.

If your e-file is still pending, you won't be able to make changes until the IRS either accepts or rejects it. Don't know your e-file status? Here's how to look it up.

Select your tax year for amending instructions:

• 2020
• 2019
• 2018
• 2017

Keep in mind: You have 3 years from the date you filed your return or 2 years after you paid the tax due (whichever is later) to file an amendment.

Related Information:

• What does it mean to "amend" a return?

[ET17]

Hello,

I'm really struggling to amend my prior tax returns, for some reason Turbotax doesn't let me download my prior .tax file, even though I did buy Turbotax every year since 2017, apparently under two different accounts... It requests that I buy again TurboTax: "

"Download your past TurboTax returns

Looks like you didn't file with us last year or you filed using a TurboTax product that doesn't include access to prior-year returns.

To download your prior-year TurboTax returns, just get started with your 2020 tax return in the TurboTax product that's right for you."

I bought cryptos with cash in 2017 and 2018 and sold all of them in 2020 in cash, in between there were only trades between "coins" (I've never sold any cryptos with USD in between), am I going to be in trouble if I just claim short term losses on my 2020 tax return for the difference between what I bought back in 2017 and 2018 and what I sold in 2020 instead of trying to retrace three years of crypto transactions and amend three tax returns that have already been approved?

By the way, when I look at the status of my 2017 tax return, it shows under the efile details: "Received by IRS: Pending" => am I going to be able to amend the tax return?

Thank you in advance for your response

[ThomasM125]

If you purchased crypto currency in 2017 and 2018, held them and then sold them in 2020, you would enter the sale in 2020 and enter the date your acquired them so the loss on sale would be a long term capital loss in 2020. I assume by losses you mean the investments went down in value, but you don't report that on your tax return until you sell or trade them, or when they become worthless if that happened.

You should wait until your 2017 return is processed before you amend it. Otherwise, the amended return might not be accepted by the IRS.

[ET17]

Hello,

No I meant that I bought crypto with usd in 2017, then made crypto against cryptos trades and then sold all my cryptos in usd in 2020. My bank account has a withdrawal in 2017 and a deposit in 2020, nothing in between. It's so complex to re trace all the trades made in the last three years and make three amendments (possibly not even doable as my 2017 tax return still has an efile status of pending and I need to file the amendment by mid April) that I'm tempted to just declare the losses on my 2020 tax return as short term losses, does that make sense? Do I risk to be in trouble by doing that?

Thanks,

[JohnB5677 · Accepted solution]

To simply file your 2020 return without the previous years would be incorrect.

To accurately file your taxes you will have to file amended returns starting with 2017.  The profit and loss for each year will be different, and that is the only way to get it correct.

Although cryptocurrencies are similar, the are not the same.  FedEx and UPS are similar, but they are completely different stocks.  Likewise, each cryptocurrency is different.

You can file a 2017 amended return up to 04/15/2021.