Did you invest in crypto at any point during the previous tax year? If so, you may have to claim your assets when tax season rolls around!

Cryptocurrency burst into the scene many years ago, but it only recently became mainstream. It's now a popular investment opportunity that millions take advantage of to diversify their portfolios. Crypto is decentralized, but that doesn't mean you're off the hook for your taxes. There are still many crypto tax forms to provide and reporting duties to complete.

How Does the IRS Treat Cryptocurrency?

There's a common misconception that you don't have to pay taxes on crypto investments. However, that's not the case!

The IRS views virtual currency as a capital asset. It's another piece of property, and it's treated the same as your home, car and other types of investments you own. That means that every purchase, sale and exchange is a taxable event. The same goes for other income-producing ventures, such as airdrops, forking and mining.

Any income you earn from investing in crypto is taxable. Therefore, you must claim your crypto and provide accurate reports. Otherwise, you may be subject to audits and pricey penalties!

What Crypto Tax Forms Do You Need?

There are a few ways to claim crypto on your taxes. What you use depends on the activities you do while investing.

If you traded crypto with an exchange, you would likely receive a 1099-B. Exchanges must provide this document to any user that sells virtual currency, exchanges coins or uses crypto as a form of payment for services and goods. The 1099-B will detail those transactions for accurate reporting.

The form you use to claim crypto on your taxes is Form 8949. You may also use Schedule D or Form 1040. For Form 8949, you must provide crypto sale details, documenting capital gains and losses. It's also paramount that you provide dates of the transactions, as crypto is subject to both short-term and long-term capital gains tax.

If you mine crypto or receive it as payment, you may also get a 1099-MISC. It will help you report the additional income.

Author Resource:-

Emily Clarke writes about portfolio management, finance tracking and Consumer SaaS services. You can find her thoughts at cryptotax calculator blog.