0

During 2020, I did 100 crypto trades: buying/selling many type of crypto currencies. I used an online service (Bitcoin.tax) to calculate my tax liability for 2020 tax year. It processed all my trades and generated final numbers for Turbotax software.

Then during 2021, I did 50 trades (buying/selling). Some of them on new crypto and some on whatever crypto I had left from the year earlier.

Situation: I am working on 2021 taxes now. I want to use a different service (Cointracker.io or something else) to calculate my 2021 tax liability.

Question 1: Does 2021 service needs my 2020 details to calculate accurate numbers? What information does 2021 service needs from 2020 service?

Question 2: What are the best practices of doing taxes of crypto trades?

1 Answer 1

2

Yes, you'd need 2020 information assuming that you didn't close out all your positions before the end of 2020 (or that you closed all your positions but had wash sales when you re-opened them in Jan 2021). In general, you'd need to know your cost basis and purchase dates of assets to know what gains (or losses) you've made and whether they're short or long-term. The specific information requirements, though, is something the service should be telling you because there are multiple ways to account for investments and you need to know what was used (i.e. were they using specified lots, FIFO, or average basis) and what the new service uses.

As for question 2, "best practice" is hard to answer objectively. Other than "make sure you pay your taxes". Some people have a CPA do their taxes, some people want to do all the calculations themselves, some people want to use a service. Doing calculations yourself ensures that you know exactly how all the calculations were done but that's more work and there is always the risk that you make an error.

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.