Crypto losses over several years

7 replies
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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.

JohnB5677Answer

Alumni - Intuit

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,

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.

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AmyC

Alumni - Intuit

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:
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.

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ET17Author

Level 2

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

Alumni - Intuit

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:

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: