PFT #68 - Personal Finance Tip of the Week: Tracking Crypto Gains and Losses for IRS Tax Filing

<p><span style="font-weight: 400;">This week’s topic is about tracking your crypto currency transactions for tax purposes.</span></p> <p><span style="font-weight: 400;">There are more than 10,000 coins on the market making crypto a household word. Hence, the IRS has taken note and expects filers to report results of their trading activity.</span></p> <p><span style="font-weight: 400;">We covered this in our personal finance tip #55 where each year you calculate what you have in gains versus losses, and determine what that number is. </span></p> <p><span style="font-weight: 400;">For example, if you sell Bitcoin for $10,000 in profit and sell Solana for an $8,000 loss, you have a realized capital gain of $2,000. On the inverse you’d have a $2,000 loss. </span></p> <p><span style="font-weight: 400;">Keep in mind that realized gains for assets held under one year are taxed as ordinary income meaning it will add to your overall earnings for the year. </span></p> <p><span style="font-weight: 400;">Now in the event that you incur a loss, the IRS allows for a maximum amount of $3,000 each calendar year inclusive with carry forward losses.</span></p> <p><span style="font-weight: 400;">So this is simple math right? Correct! However, with the numerous coin exchanges available and their lack of infrastructure, tracking your activity is proving to be difficult. </span></p> <p><span style="font-weight: 400;">For example, if you bought Shiba Inu on</span> <a href= "https://www.cnbc.com/quotes/COIN"><span style= "font-weight: 400;">Coinbase</span></a><span style= "font-weight: 400;">, transferred it to your wallet and then moved it to Gemini, the second exchange doesn't know the original purchase price.</span></p> <p><span style="font-weight: 400;">It is not as simple as going online to the exchanges and they’ll have a detailed history.</span><span style="font-weight: 400;"> </span></p> <p><span style="font-weight: 400;">Therefore, it is incumbent upon you to track this information that will be reported on</span> <a href="https