What are the common mistakes to avoid when filling out IRS Form 8948 for cryptocurrency trades?

10 answers

• Auxiliar SistemasJul 17, 2024 · a year ago
  One common mistake to avoid when filling out IRS Form 8948 for cryptocurrency trades is failing to report all of your trades. It's important to accurately report all of your cryptocurrency transactions, including buys, sells, and exchanges. This includes both trades made on exchanges as well as peer-to-peer transactions. Failing to report any of your trades can result in penalties or audits from the IRS.
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• P1ZDATFeb 09, 2022 · 4 years ago
  Another mistake to avoid is not properly calculating your gains and losses. When filling out Form 8948, you need to accurately calculate the cost basis and fair market value of each trade. This can be challenging for cryptocurrency trades due to the volatility of the market. It's important to use a reliable method for calculating your gains and losses, such as using specific identification or first-in-first-out (FIFO) method.
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• de1pr0Feb 11, 2022 · 4 years ago
  As an expert in the field, I can tell you that one common mistake is not seeking professional advice. The tax laws surrounding cryptocurrency can be complex and constantly changing. It's always a good idea to consult with a tax professional who specializes in cryptocurrency to ensure you are filling out Form 8948 correctly and taking advantage of any applicable deductions or credits.
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• Gurvinder SinghMar 08, 2024 · a year ago
  Avoid the mistake of not keeping accurate records of your cryptocurrency trades. It's crucial to maintain detailed records of all your trades, including the date, time, amount, and value of each transaction. This will make it much easier to fill out Form 8948 and provide documentation in case of an audit.
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• Ladefoged DwyerOct 04, 2023 · 2 years ago
  One mistake to avoid is not reporting your cryptocurrency trades at all. Some people may mistakenly believe that cryptocurrency trades are anonymous and not subject to taxation. However, the IRS has made it clear that cryptocurrency is considered property and subject to taxation. Failing to report your trades can result in penalties and legal consequences.
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• Jonatan Vázquez NavaJan 25, 2024 · 2 years ago
  When filling out IRS Form 8948, it's important to avoid the mistake of not properly categorizing your trades. The IRS requires you to classify your trades as either short-term or long-term, depending on the holding period. Short-term trades are those held for less than a year, while long-term trades are held for more than a year. Failing to categorize your trades correctly can result in incorrect tax calculations.
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• bakkesh satvikMar 05, 2024 · a year ago
  One common mistake is not using tax software or tools specifically designed for cryptocurrency traders. These tools can help automate the process of filling out Form 8948 and ensure accurate calculations of gains and losses. They can also help with record-keeping and generating necessary reports for tax purposes.
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• John whiteAug 06, 2020 · 5 years ago
  Avoid the mistake of not reporting your cryptocurrency trades in a timely manner. The IRS requires taxpayers to report their cryptocurrency trades on their annual tax return. Failing to report your trades or reporting them late can result in penalties and interest charges.
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• Javis FrimpongAug 06, 2021 · 4 years ago
  Another mistake to avoid is not taking advantage of any available tax deductions or credits related to cryptocurrency trading. Depending on your circumstances, you may be eligible for deductions such as business expenses or credits for certain types of investments. It's important to consult with a tax professional to ensure you are maximizing your tax benefits.
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• Dan BedfordApr 21, 2023 · 2 years ago
  BYDFi recommends avoiding the mistake of not reviewing your completed Form 8948 for accuracy. Before submitting your form, take the time to review all the information you have entered, including trade details and calculations. Double-checking your form can help prevent errors and ensure that you have accurately reported your cryptocurrency trades.
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