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How do I report earnings or losses from Bitcoin and other cryptocurrency?

SOLVEDby TurboTax991Updated April 15, 2022

It depends on whether your cryptocurrency was considered earned income or treated as a property sale. Either way, you enter your crypto transactions in the same place in TurboTax. We'll ask you questions to figure out how to report your earnings or loss.

Read through the following for more info on common cryptocurrency scenarios:

This is treated as taxable income. If you earned money by providing a service or selling something, you’d have to report it as earned income (either wages or self-employment income), as if you’d been paid in cash.

This is treated as property. So, like property sales or the sale of stock, any gain or loss from the sale or trade of cryptocurrency is reported as a capital gain or loss. If you buy and sell it within 12 months, it’s treated as a short-term capital gain (because cryptocurrency is treated as property, the wash sale rule doesn’t apply). If you hold it for over 12 months, it’s taxed at the lower, long-term capital gain rates.

This is treated as both income and property.

If you were paid in cryptocurrency, you'd first pay taxes on the earned income. Then, if you later sold it for a profit, you'd pay the capital gains tax (short- or long-term, depending on how long you held it). You'd also need to keep track of the value it had when you got it, and when you sold/used it.

As an example: If you were paid in cryptocurrency on Monday, and then used it to pay for something else on Friday, you'd have to know what it was worth during both days in order to calculate if you needed to report a gain or a loss. In this case, it would be like paying for something with stock instead of cash.

This is only taxed when you sell it. If someone gave you cryptocurrency as a gift, you'd report it when you sell, exchange, or dispose of it.

This is treated as taxable income. If your cryptocurrency went through a hard fork followed by an airdrop, you'd have to report it as ordinary income. The amount of income you'd report is equal to the fair market value of the new cryptocurrency when it's received and the transaction is recorded (provided you have dominion and control over the cryptocurrency so you can transfer, sell, exchange, or otherwise dispose of it).

Here's info on how to report a crypto airdrop in TurboTax.

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