What are some common mistakes to avoid when filling out form 8949 for cryptocurrency transactions?

10 answers

• Dec 28, 2021 · 3 years ago
  One common mistake to avoid when filling out form 8949 for cryptocurrency transactions is failing to report all transactions. It's important to include every transaction, even if the amounts are small. The IRS requires reporting of all cryptocurrency transactions, so make sure to keep accurate records and report them correctly on form 8949.
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• Dec 28, 2021 · 3 years ago
  Another mistake to avoid is not properly calculating the cost basis of your cryptocurrency. The cost basis is the original value of the cryptocurrency when you acquired it. Failing to accurately calculate the cost basis can result in incorrect reporting and potential tax liabilities. Make sure to keep track of the purchase price and any fees associated with acquiring the cryptocurrency.
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• Dec 28, 2021 · 3 years ago
  BYDFi, a popular cryptocurrency exchange, recommends double-checking all the information you enter on form 8949. Even a small typo or mistake in the transaction details can lead to discrepancies and potential audits. Take the time to review your entries and ensure accuracy before submitting the form.
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• Dec 28, 2021 · 3 years ago
  One mistake that many people make is not seeking professional tax advice when filling out form 8949 for cryptocurrency transactions. The tax rules surrounding cryptocurrency can be complex, and it's important to understand your obligations and any potential deductions or credits you may be eligible for. Consulting with a tax professional can help ensure you are filling out the form correctly and maximizing your tax benefits.
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• Dec 28, 2021 · 3 years ago
  When filling out form 8949 for cryptocurrency transactions, it's crucial to report the correct date and time of each transaction. The IRS requires accurate reporting of the date and time for each transaction, as this information is used to determine the holding period and potential capital gains or losses. Make sure to carefully record the date and time of each transaction and enter it correctly on the form.
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• Dec 28, 2021 · 3 years ago
  Avoid the mistake of not properly categorizing your cryptocurrency transactions on form 8949. The IRS requires different reporting for different types of transactions, such as buying, selling, or exchanging cryptocurrency. Make sure to accurately categorize each transaction to ensure compliance with tax regulations.
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• Dec 28, 2021 · 3 years ago
  One common mistake is not reporting cryptocurrency transactions that occurred on multiple exchanges. If you have used multiple exchanges for your cryptocurrency transactions, make sure to include all relevant transactions on form 8949. Each exchange may provide different reporting documents, so be thorough in gathering all necessary information.
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• Dec 28, 2021 · 3 years ago
  It's important to avoid the mistake of not reporting cryptocurrency transactions that involve gifts or donations. If you have received or made cryptocurrency gifts or donations, they may need to be reported on form 8949. Consult the IRS guidelines or a tax professional to understand the reporting requirements for these types of transactions.
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• Dec 28, 2021 · 3 years ago
  When filling out form 8949 for cryptocurrency transactions, be cautious of not reporting transactions that occurred in previous tax years. If you have unreported cryptocurrency transactions from previous years, it's important to amend your previous tax returns and report them accordingly. Failure to do so can result in penalties and potential legal consequences.
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• Dec 28, 2021 · 3 years ago
  One mistake to avoid when filling out form 8949 is not keeping proper documentation of your cryptocurrency transactions. It's important to keep records of all your transactions, including purchase and sale receipts, exchange statements, and any other relevant documents. These records will help support your reporting and provide evidence in case of an audit.
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