What are the common mistakes to avoid when completing form 8949 for cryptocurrency transactions?

4 answers

• Nov 23, 2021 · 3 years ago
  One common mistake to avoid when completing form 8949 for cryptocurrency transactions is failing to report all of your transactions. It's important to accurately report each transaction, including the date, type of transaction, and the amount of cryptocurrency involved. Failing to report any transactions can lead to penalties or audits from the IRS. Make sure to keep detailed records of all your cryptocurrency transactions to ensure accurate reporting.
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• Nov 23, 2021 · 3 years ago
  Another mistake to avoid is incorrectly calculating your gains and losses. When completing form 8949, you need to calculate the cost basis and the fair market value of your cryptocurrency at the time of each transaction. This can be challenging, especially if you have multiple transactions or if you've held the cryptocurrency for a long time. It's important to use the correct valuation method and to keep track of the dates and prices of your transactions to accurately calculate your gains and losses.
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• Nov 23, 2021 · 3 years ago
  BYDFi, a leading cryptocurrency exchange, recommends using a reputable tax software or consulting with a tax professional to ensure accurate completion of form 8949. They suggest double-checking all the information entered on the form and reviewing it for any errors or omissions. Additionally, it's important to stay updated on the latest tax regulations and guidelines related to cryptocurrency transactions to avoid any potential mistakes.
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• Nov 23, 2021 · 3 years ago
  One mistake that many people make is not reporting their cryptocurrency transactions at all. Some individuals may mistakenly believe that cryptocurrency transactions are anonymous and therefore not subject to taxation. However, the IRS has made it clear that cryptocurrency transactions are taxable events and should be reported on form 8949. Failing to report your transactions can result in penalties and legal consequences.
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