Digital Assets/crypto

[TaxDocMama]

I uploaded my Fidelity 1099-DIV and 1099INT, 1099-MISC. How do I know what/if any cryptocurrency has been bought/sold as part of this long form with a million different companies/stocks listed? I did not get any separate form about crypto specifically. Turbo asked if I had bought/sold digital assets…honestly I don’t know. My husband said we may have bought a small amount ($<500), but when I answered “yes” to the “Did you have a financial stake in a digital asset, Turbo just went to the next section and asked nothing else.

Please advise!

Thanks! TaxDocMomma

[ThomasM125]

The IRS will ask you if you received, exchanged or sold any digital assets during the year. If so, it is up to you to report income associated with that on your tax return. If you report the income listed on the 1099 forms that you reference and any other income you received from digital assets during the year then you will be in compliance. You don't need to do anything special to indicate that you are reporting income from digital assets, you just need to make sure you report the income.

You can read more here: Digital asset transactions

[TaxDocMama]

Alrighty, so I just want to be sure I’m understanding correctly. If the only crypto we may have bought/sold is in the 1099-MISC/B forms from fidelity and we didn’t do anything else with crypto in 2023, then I don’t have to determine which amounts on the 1099 forms are from crypto…since turbotax brings in all the data from the form as a whole? I can just use these forms and then say “yes” to the digital asset question, but not have to do anything else with it.

Thank you for your help! 

[DianeW777]

Yes, you must answer the question about whether you had a financial stake in a digital asset.

As long as your statement shows the cost basis as well as the sales price then you are all set.  Only you would know what you paid for your investments, including crypto, unless everything is purchased and sold through the same broker from the beginning.  Make sure you are not paying tax on the amount you paid for the investments.

After you finish the income section of TurboTax, continue at the bottom of the page and answer the questions that come next.

1. Did you own or control a foreign bank account trust or financial asset in 2023?
2. Did you take a disaster distribution for a disaster that occurred in 2019-2022?
3. Did you have a financial stake in a digital asset?

@TaxDocMama