Turbotax Online setting digital asset question to No even after entering crypto transactions (2024)

FAQs

Why does TurboTax ask if I bought cryptocurrency? ›

The IRS treats cryptocurrency as property, meaning that when you buy, sell or exchange it, this counts as a taxable event and typically results in either a capital gain or loss.

If, instead, you made money on the sale or exchange of your crypto last year, you realized a capital gain. If you held that digital asset less than a year, it's considered a short-term gain and will be taxed at ordinary income tax rates.

The Form 1040 now asks, “At any time during 2023, did you receive, sell, send, exchange or otherwise acquire any financial interest in any virtual currency?” The IRS added this question to remove any doubt about whether cryptocurrency activity is taxable.

Once you have your figures, go here to learn how to add your crypto to TurboTax. There's an upload limit of 4,000 cryptocurrency transactions in TurboTax. If you have more than that, you'll need a transaction aggregator. We'll walk you through that in the crypto section.

US taxpayers must report any profits or losses from trading cryptocurrency and any income earned from activities like mining or staking on tax return forms, such as Form 1040 or 8949. Not reporting can result in fines and penalties as high as $100,000 or more severe consequences, including up to five years in prison.

Any cryptocurrency capital gains, capital losses, and taxable income need to be reported on your tax return. You can report your capital gains and losses on Form 8949 and your income on Form 1040 Schedule 1 or Schedule C depending on your situation.

You must report income, gain, or loss from all taxable transactions involving virtual currency on your Federal income tax return for the taxable year of the transaction, regardless of the amount or whether you receive a payee statement or information return.

A “No” answer is correct if during the taxable year the taxpayer merely holds digital assets, transfers digital assets between accounts owned by the taxpayer, or purchases digital assets with U.S. or other real currency.

What is not considered a digital asset? ›

What Is an Example of a Digital Asset? A digital asset is anything in digital form that can create value. You can still create something digitally, but it is not a digital asset if it has no value.

”At any time during 2023, did you: (a) receive (as a reward, award or payment for property or services); or (b) sell, exchange, or otherwise dispose of a digital asset (or a financial interest in a digital asset)?”

This is a broad question that you would have to answer yes to if you have touched crypto in any form, even if you just held bitcoin the IRS want to monitor this for future years when you do sell. Crypto taxes are a voluntary system, you are supposed to volunteer information about your trades and how much you owe.

A digital asset is a digital representation of value recorded on a cryptographically secured distributed ledger or similar technology. If a particular asset has characteristics of a digital asset, it's treated as one for federal income tax purposes.

US taxpayers must report any profits or losses from trading cryptocurrency and any income earned from activities like mining or staking on tax return forms, such as Form 1040 or 8949. Not reporting can result in fines and penalties as high as $100,000 or more severe consequences, including up to five years in prison.

The IRS treats cryptocurrencies as property for tax purposes, which means: You pay taxes on cryptocurrency if you sell or use your crypto in a transaction, and it is worth more than it was when you purchased it. This is because you trigger capital gains or losses if its market value has changed.

The crypto tax question for 2022

‍“At any time during 2022, did you (a) receive (as a reward, award, or payment for property or services); or (b) sell, exchange, gift, or otherwise dispose of a digital asset (or a financial interest in a digital asset)?”