What are the common mistakes to avoid when completing IRS tax form 8949 for cryptocurrency gains/losses?

10 answers

• Nov 24, 2021 · 3 years ago
  One common mistake to avoid when completing IRS tax form 8949 for cryptocurrency gains or losses is failing to report all transactions. It's important to include every buy, sell, trade, or conversion involving cryptocurrency, even if it's a small amount. The IRS requires accurate reporting, and failing to do so can result in penalties or audits.
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• Nov 24, 2021 · 3 years ago
  Another mistake to avoid is not properly calculating the cost basis for each transaction. The cost basis is the original value of the cryptocurrency at the time of acquisition, and it's used to determine the capital gains or losses. Make sure to accurately calculate the cost basis for each transaction to avoid any discrepancies.
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• Nov 24, 2021 · 3 years ago
  At BYDFi, we recommend using a reputable tax software or consulting with a tax professional to ensure accurate reporting on IRS tax form 8949. They can help you navigate the complexities of cryptocurrency taxation and avoid common mistakes. Remember, it's always better to be safe than sorry when it comes to reporting your cryptocurrency gains or losses.
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• Nov 24, 2021 · 3 years ago
  When completing IRS tax form 8949, it's important to double-check all the information before submitting. Mistakes such as incorrect dates, transaction amounts, or missing information can lead to delays or even rejection of your tax return. Take the time to review your form and ensure all the details are accurate.
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• Nov 24, 2021 · 3 years ago
  One mistake that many people make is not keeping proper records of their cryptocurrency transactions. It's crucial to maintain detailed records of all your buys, sells, trades, and conversions, including dates, amounts, and values. This will make it easier to accurately complete IRS tax form 8949 and provide supporting documentation if needed.
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• Nov 24, 2021 · 3 years ago
  Avoid the mistake of not reporting cryptocurrency losses. Even if you had a net loss for the year, it's still important to report it on IRS tax form 8949. This will help establish a clear record of your transactions and can be used to offset future gains.
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• Nov 24, 2021 · 3 years ago
  Don't forget to report any airdrops, forks, or other cryptocurrency-related events that may have resulted in additional tokens or coins. These events can have tax implications, and it's important to include them in your IRS tax form 8949.
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• Nov 24, 2021 · 3 years ago
  Remember, the IRS is actively cracking down on cryptocurrency tax evasion. It's crucial to accurately report your cryptocurrency gains and losses on IRS tax form 8949 to avoid potential penalties or legal issues. If you're unsure about any aspect of reporting, consult with a tax professional for guidance.
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• Nov 24, 2021 · 3 years ago
  When completing IRS tax form 8949, it's important to be consistent with your reporting. Use the same method for calculating gains or losses throughout the form and ensure that all the numbers align. Consistency will help avoid any red flags or discrepancies in your tax return.
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• Nov 24, 2021 · 3 years ago
  Avoid the mistake of not understanding the specific instructions for IRS tax form 8949. Take the time to read and comprehend the guidelines provided by the IRS to ensure accurate reporting. If you're unsure about any aspect, seek clarification from a tax professional or refer to the IRS website for more information.
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