When it comes to filing your cryptocurrency taxes, you’ll need to fill out the appropriate crypto tax forms to avoid potential costly penalties. If you’re new to cryptocurrency or you aren’t familiar with the regulations surrounding taxes, rest assured that our team is happy to help! 

One of the most important forms to keep in mind is Form 8949. Here’s everything you need to know for accurate filings ahead of the 2022 tax season.

What is Form 8949?

Since 2014, the IRS has required all cryptocurrency transactions including Bitcoin and Ethereum to be treated as taxable property. Form 8949 is used to keep track of your cryptocurrency capital gains and losses and each sale is reported on this form. Form 8949 is broken into two distinct parts: short-term gains and long-term gains. In the case that you had non-crypto investments, be sure they are filled out on separate Forms 8949.

Need more information on how to fill out the form? Here’s what you should know.  

How to Fill Out Form 8949 

While we always recommend using one of our cryptocurrency tax experts, you can also fill out Form 8949 on your own if you follow the steps carefully. 

To begin, fill out the initial information at the top of the form. It will show a short-term trades section that asks you to select box A, B, or C:

  • (a) Short-term transactions reported on Form(s) 1099-B showing basis was reported to the IRS
  • (b) Short-term transactions reported on Form(s) 1099-B showing basis wasn’t reported to the IRS
  • (c) Short-term transactions not reported to you on Form 1099-B

In most cases, users who select C—crypto exchanges usually do not provide Form 1099-Bs, but in the case that they do, check either A or B.

Then, you’ll need to organize calculations by row and notate the transaction details such as:

  • Property description
  • Date acquired
  • Date sold or disposed of
  • Proceeds
  • Cost basis
  • Adjustment, if any, to gain or loss
  • Gains or losses

The next step is to aggregate the boxes located at the bottom of the form: total proceeds, total cost or other basis, total adjustment, and total gain (or loss). It’s important to note that if you traded large volumes of cryptocurrency, it’s normal to see your cost basis and proceeds total a larger sum than you anticipated as it reflects all of your cost basis/proceeds.

Repeat the steps to fill out the long-term trade information in the second part of the form. 

Can Crypto Tax Software Help?

Absolutely! Many crypto tax software options on the market can automatically fill out this form on your behalf. We also highly recommend turning to one of our professionals at Founder’s CPA for guidance on cryptocurrency taxes. 

Request a Free Consultation Today

The last thing you want is to overpay on your cryptocurrency taxes. To prevent this from happening and to ensure your filings are filled out accurately, make sure to take advantage of our complimentary consultations! Whether you’re an individual who needs help or you’re a small business looking for guidance, you’ll find what you need at Founder’s CPA.

Curt Mastio
Post by Curt Mastio
Dec 1, 2023 1:55:36 PM
Curt Mastio started Founder’s CPA in 2017 and currently serves as the Managing Partner of the firm. After obtaining both his Bachelor’s and Master’s degrees in accounting from the University of Illinois in Urbana-Champaign Curt started his career in Big Four public accounting. Shortly thereafter Curt served as the Chief Financial Officer of Storage Squad began his stint as an Adjunct Instructor at Northwestern University’s Farley Center for Entrepreneurship and has been teaching Accounting & Finance to undergraduate students for 6+ years. In his current role Curt oversees strategy, operations, and business development at Founder’s CPA. Further, Curt has experience working directly with 200+ startups and small businesses providing accounting, tax, and outsourced CFO services. His industry expertise lies in the SaaS, Blockchain, Marketplace, and Fintech industries. He has served as a key advisor working directly with startups that range from pre-revenue to companies generating over $30 million dollars a year in revenue. Lastly, he serves a key role working directly with the firm’s clients that have collectively raised over $200 million in venture capital funding to date. Curt is also an active advisor, mentor, and investor in the startup ecosystem. He has facilitated numerous workshops, webinars, and presentations to incubators and other startup-centric organizations. He is also an active mentor for Techstars in both Chicago and Iowa. Outside of his daily professional duties Curt is actively involved with Beat the Streets Chicago and was a founding member of its Young Professionals Board. His efforts in both leadership and community involvement were recognized when he was awarded the Illinois CPA Society’s Outstanding Young Professional Leadership Award in 2020. He was also a panelist at their annual conference in 2022 where he spoke about his experiences starting and operating a public accounting firm. He maintains an active Certified Public Accountant designation that he obtained in 2014. Outside of work, Curt can be found spending time with his friends & family including his dog Rufus. His hobbies include golf, boating, cooking, reading, and attending sporting events & concerts.