What documents do we need for crypto tax preparation?

By January 7, 2019 January 9th, 2019 Personal Crypto Tax Information
Man with glasses getting help with crypto taxes

This article will give you important information about the documents and forms you’ll need to gather before we can start on preparing your crypto tax return.  You will need these documents not only for our services, but also to protect yourself in the event of an IRS audit. Being able to prove your numbers and other tax items is the quickest way out of an IRS dispute.

If you still have questions about what documents you need to gather after reading this article, please feel free to reach out for additional explanation.

1. Tax Questionnaire

This form is the starting point for your tax preparation. It gives us answers many questions that we need to ask during the process without the need for dozens of extra emails or phone calls. This includes things like your name and contact information, family information, and types of income. The questionnaire might seem like a lot of pages, but it wills ave you (and us) a lot of time and hassle in the long run.

Prior Year Tax Return

Believe it or not, but your prior year tax return can help you with your current tax return in a lot of ways. It provides us with a much needed point of reference for your current tax situations. Many tax items, such as capital losses, can be carried from one year to the next — and we definitely don’t want to miss that kind of valuable tax deduction on your current return. Your prior year tax return can also be very helpful in making sure you’re eligible for certain tax benefits in the current year.

2. Standard Income Documents

In order to prepare your crypto tax return, we need to know about all of your income sources. Here is a list of the types of income that most clients have and the corresponding documents that we need (not all will apply to your situation):

  • Form W-2 (Wages, Compensation, Salary)
  • Form 1099-INT (Interest)
  • Form 1099-DIV (Dividends)
  • Form 1099-B (Proceeds from Broker Transactions)
  • 1099-MISC (Miscellaneous Income)
  • 1009-R (Distributions From Pensions, Annuities, Retirement Plans)
  • 1099-G (State Tax Refunds and Unemployment)
  • 1099-HSA (Distributions from Health Savings Accounts)

Not all income is reported on a W-2 or a 1099. If you had any income from the following sources, we’ll need you to provide a Profit and Loss Statement (P&L) for each activity to show your income and expenses:

  • Self Employment
  • Rental Property
  • Gambling
  • Freelance Work

3. Deductions Documents

Certain expenses are deductible on your tax return. Here is a list of common deductions and the corresponding forms:

  • Mortgage Interest (Form 1098)
  • Real Estate Property Taxes
  • Student Loan Interest (1098-E)
  • College Tuition (Form 1098-T)
  • Estimated Payments for State/Local Taxes
  • Margin Interest

4. Crypto Documents

We can’t prepare your crypto tax return without records of your crypto activity. The actual documents we’ll need will depend on whether or not you have asked us to calculate your crypto gain/loss.

Calculate Crypto Gains Yourself: Software like bitcoin.tax makes it relatively easy to reconcile your crypto trades and calculate your gain or loss. Once you’re finished, we need you to export the “Form 8949 Statement” as a comma separated file (.csv) and upload it to Onvio. Every crypto calculator we’ve seen provides this exported file, but if you’re having trouble locating it please let us know. We can then incorporate this file into Form 8949 and Schedule D of your tax return.

Let Us Calculate Your Crypto Gains: This is an additional service that is not included in our normal Federal Tax Package. You can read more about our fee schedule and the cost of calculating your crypto gains. If you want to use this service, then we need the following documents:

  • Transaction report from each crypto exchange (exported as a .csv file)
  • List of all mining rewards, staking rewards, airdrops, or hardforks that need to be reported as income on your tax return
  • List of all crypto gifts or donations you made or received
  • List of all lost, stolen, or hacked coins
  • List of all purchases of goods/services made with crypto
  • List of all ICO investments

We’ve prepared a separate article that goes into more depth about the documents we need for calculating your crypto gains, including instructions for exporting the correct transaction report each crypto exchange.

5. Foreign Crypto Exchange Accounts

US taxpayers are generally required to report their foreign bank accounts and financial assets with their tax return. Cryptocurrency is still in a gray area for these reporting obligations, but the most cautious approach is to report offshore exchange accounts if their value exceeds the minimum requirements.

The FBAR’s reporting requirement is triggered if you have more than $10,000 in all of your offshore accounts added together. The Form 8938 requirement is triggered when the total value of your foreign financial assets is more than $50,000 on the last day of the tax year, or more than $75,000 at any time during the year (those amounts are doubled if you are filing as a married couple).

If you want to disclose your crypto exchange accounts as a precaution, we would need you to provide a list of all of your foreign crypto exchange accounts with the email address you used for the account and the highest balance of the account during the year.

Let’s Get Started

Are you ready to get started on your crypto tax preparation? If you haven’t signed up already, please go to this link to fill out the intake form. We help make the crypto tax process as easy as possible.

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