Cryptocurrency Tax Tips: A Guide to Capital Gains and Losses

Despite the pandemic, investors have potentially made a lot of gains through cryptocurrency trading, the stock market, and more.

So what should people think about when filing their tax returns for the 2021 tax year?

In the video above, Certified Public Accountant (CPA) and TurboTax expert Lisa Greene-Lewis shares some tips for new investors.

Advice for new investors:

Full transcript of the video below:

Tracy Byrnes: The stock market, despite the pandemic, has kind of been on fire. So people potentially have a lot of gains. Crypto moves. I mean, you need, you know, Dramamine to keep up with it, but it’s moving. So there could also be capital gains. So what should people think about?

Lisa Greene-Lewis: Yes, so I know there are a lot of new investors. The first thing they need to think about, I mean, I often hear the question that people don’t even know when their transactions are taxable. So they have to think, you don’t have a taxable event until you sell your stock or crypto. Also, depending on how long you hold your shares before selling them, that’s also how you’re taxed. If you hold your stocks or your crypto for longer than a year, you get those long-term capital gains, which are less, you know, you’re taxed less. And then also remember if you lost stocks or crypto losses when you sold, which a lot of people don’t. But if you did, you can offset your gains with those losses. And then your losses can be carried over to your ordinary income like, you know, your W-2 income or your self-employment income, and that can be up to $3,000.

Tracy Byrnes: So I gather my investments, and crypto, in particular, is starting to get so confusing because people are trading it. How can I even keep track of this with my tax return?

Lisa Greene-Lewis: So we have TurboTax Premier, and that really becomes one of the biggest points of compensation for investors. We are able to directly import your stop trades and crypto trades from these financial institutions and crypto platforms. So we can directly import up to 4,000 cryptocurrency transactions and 10,000 stock transactions at a time.

Tracy Byrnes: Lisa Greene-Lewis, CPA and TurboTax expert, thank you so much for clarifying this.

Editor’s note: Video produced by Zach Fauld of TheStreets