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Now that we are in the midst of tax season, crypto enthusiasts are scrambling to do the right thing before the April 15 deadline. And it is extremely important they know a few things. When I joined steemit and bought some alts, I had heard a lot of "you don't have to pay taxes on these coins, that's the beauty of it". Well, it's not exactly true, if you think that blockchain is synonymous with anonymity and won’t get caught, well.. here's some news for you. The government is already working with blockchain analytics companies like Chainalysis so they can uncover large USD sells that go unreported. I had a bunch of questions while doing my taxes and found some answers. Here's a bit of information that I hope you'll find useful. Turns out EVERY digital currency transaction incurs a gain or loss and therefore triggers a taxable event, no matter how small. So even if you have just a couple experimental investments, you have to report that.

## When is cryptocurrency taxable? *Trading cryptocurrency to fiat currency like the dollar is a taxable event *Trading crypto to crypto is a taxable event *Using cryptocurrency for goods and services is a taxable event ## When is cryptocurrency **NOT** taxable? *When you give it as a gift *When you buy crypto with fiat currency *When you transfer from wallet to wallet

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Last year the Internal Revenue Service (IRS) obtained court approval to issue a John Doe summons to identify thousands of Coinbase users whose transactions exceeded certain thresholds.
Coinbase achieved partial success in limiting the scope of the summons, but still thousands of Coinbase users are at risk of being audited, hit with civil penalties and, depending on the circumstances, even criminally prosecuted. ### So... where to start? Well, Coinbase has made it very easy to pull a report with all your transactions, cost basis, dates, total gains/loses. If you're a Coinbase user here are the steps: Go to Tools at the top of the page, then to the Reports Tab. Click on New Report ![coinbase.PNG](https://steemitimages.com/DQmX1usd73twjStqoAmvQaubcd1whXxhTmovPLt3Eq1Vc79/coinbase.PNG)
Then you'll select Type: "Cost Basis for Taxes" and the year 2017 and you'll have to do this for each of the accounts you used (BTC, ETH, LTC...)
![Report.PNG](https://steemitimages.com/DQmYeF8GqkXEE2VHZRpdxZdzXWkh9Vj26KqY7GtQqFhM8fS/Report.PNG) I'd expect that other wallets like Binance, Bittrex have their own way of pulling reports. You will need that. ## Ok, how do I use this information?

The most common problem is that digital currency investors and traders simply don’t know how to report their gains and companies can’t keep up with new tax reporting obligations. Digital currency is currently identified as a form of property, so you won't find a section on TurboTax or HR Block (or whatever software you use to file taxes) spelling out "cryptocurrency". What you need to do is enter it as a Property Sale. Most likely if you're using one of these online softwares, you will have to upgrade to the Premium version, as the forms required are not supported by the basic versions. (Yay! more people benefiting from your hard earned money!) Moreover the IRS has made almost no effort to clarify the rules, and the current tax bill only made the situation more complex for traders. Uncle Sam wants a slice of your pie, and I imagine they are not too concerned about how they receive the documentation (and money) — or in what form — just that they do. I still filed using an online software, since they do an interview and figure out what forms to fill out. Just make sure you are filling out "Schedule D". I didn't enter it at the first prompt but then I did a search (Schedule D) at the end of the process when it asked me if I wanted to search for specific forms. That took me to a whole new "interview" process where I created my "property" called "cryptocurrency". There I entered the information I collected from the Coinbase report and VOILA!! I watched my return amount shrink...

![staf.gif](https://steemitimages.com/DQmPkVAV6NGPDUCK2FvZ4QQpgGGFP18SWnJQhEEB9BbQs55/staf.gif) # Frequently Asked Questions (by me..... while filing...) ### I didn't make that much money, will the IRS notice? Yes. I think the whole Eye of Sauron concept was based on the way the IRS operates... ### What if I don't file and play stupid? Hiding your crypto assets and not paying your taxes could at best end up with you owing fees, interest, and missing out on some deductions and at worst can be seen as tax fraud or evasion. You don’t want that. ### Can I claim like-kind property exchange? Unfortunately, even if like-kind applies for 2017 (and previous years), in 2018 the new U.S. tax bill bans all like-kind exchanges that aren’t related to real estate. ### I traded for fiat but I never took the money out of the bank! Does that count as a gain/loss? Well that doesn't matter, if there is a logged transaction of you trading crypto for fiat, then that's a taxable event. This is good news for holders, if you bought cryptocurrency and held it, you don’t pay taxes until you trade it for fiat or another crypto. ### What if I had a gain and then lost it? Independent capital losses and capital gains in a year can be written off against each other. ### What if I spent my crypto on a good/service? When buying goods and services, you may also owe other taxes like the sales tax. Likewise, if you use crypto in business, you could owe other taxes (like payroll or state and local taxes) as well. ### What about mining? If you mine cryptocurrency you have to pay taxes on the coins you mine, and you’ll owe the money as self-employment income and be subject to the self-employment tax. ### Do these taxes make my butt look big? Err.... This is only information I was able to gather based on my situation. I urge you to do your own research based on your specific circumstances, and if you have done some heavy trading, SEE AN ACCOUNTANT! Happy Tax Season! ![uncle_sam_tax_payer_shake_down_hg_clr.gif](https://steemitimages.com/DQme6Qj399SHdfQ8DF673oTsxg36wiJj2L3o4Kn5civzcWo/uncle_sam_tax_payer_shake_down_hg_clr.gif) ![0pzfiig7xd9kx76p685.png](https://steemitimages.com/DQmNgqaeWDVcHtg9ZEHcotgvjHtubaLKhryXvJj2Q35ab7Y/0pzfiig7xd9kx76p685.png)