Are there any common mistakes to avoid when completing form 8949 for cryptocurrency investments?

3 answers

• Dec 28, 2021 · 3 years ago
  One common mistake to avoid when completing form 8949 for cryptocurrency investments is failing to accurately report all transactions. It's important to include every buy, sell, trade, or conversion involving cryptocurrencies, even if they were done on different exchanges or platforms. The IRS requires detailed information for each transaction, including the date, type of transaction, amount in USD, and any associated fees. Failing to report all transactions can lead to penalties or audits.
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• Dec 28, 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 is used to determine the capital gains or losses. It's crucial to accurately calculate the cost basis, taking into account factors such as fees, commissions, and any other expenses related to the transaction. Using incorrect cost basis can result in inaccurate reporting and potential tax liabilities.
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• Dec 28, 2021 · 3 years ago
  BYDFi, a popular cryptocurrency exchange, recommends keeping detailed records of all cryptocurrency transactions to avoid common mistakes when completing form 8949. This includes maintaining records of the date, time, amount, and value of each transaction, as well as any associated fees. Additionally, it's important to stay updated on the latest IRS guidelines and regulations regarding cryptocurrency taxation to ensure compliance and avoid any potential mistakes.
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