When to Pay Crypto Tax?
You need to pay crypto tax when you sell, exchange, or use cryptocurrency. Taxes are triggered by specific transactions such as selling crypto for cash, exchanging one crypto for another, or using it to buy goods or services.
Additionally, earning crypto as income through mining, staking, or business activities is taxable as income. Tax is due annually when filing your federal income tax return, but estimated payments may be necessary for ongoing income.
What Forms Do You Need to Report Crypto Taxes?
- Form 8949: Report all crypto sales, trades, and exchanges here, with each transaction’s date, cost basis, and sale value.
- Schedule D: Summarize your capital gains and losses from Form 8949 and calculate net gains/losses for the year.
- Schedule 1: Report any crypto income, such as from mining, staking, or payments in crypto, as additional income.
- Form 1040: File your overall tax return, including your crypto-related forms, and answer the cryptocurrency question.
Crypto Tax Reporting Deadlines
|
Event |
Tax Deadline |
|
Annual income tax return |
April 15 (or extension) |
|
Quarterly estimated payments |
June 15, Sept 15, Jan 15 |
Services Offered by Dimov CPA
Dimov CPA provides the following services to assist with cryptocurrency tax:
- Tax filing for crypto transactions
- Capital gains/losses calculation
- Income reporting for mining or staking
- Quarterly estimated tax guidance
- IRS audit support
Frequently Asked Questions
1. Do I need to pay tax if I only hold cryptocurrency?
No, taxes are only due when you sell, exchange, or use cryptocurrency.
2. Do I pay tax if I receive cryptocurrency as a gift?
No tax is due upon receiving a gift, but taxes may apply when you sell or exchange the gifted crypto.
3. What happens if I don’t report crypto transactions?
Failure to report can result in IRS penalties, including fines and interest.
4. Do I need to pay taxes if I exchange one cryptocurrency for another?
Yes, exchanging crypto is taxable. Report capital gains or losses.
5. When do I need to pay estimated taxes on crypto income?
Quarterly estimated taxes are due if you earn crypto through mining, staking, or business.
6. What forms do I need to report cryptocurrency transactions?
Use Form 8949 for crypto sales/exchanges and Form 1040 or Schedule C for income.
