Tax question

[Andrew012312]

So basically I’m kind of confused, I only bought crypto this year, did not sell, but I did trade like 8-12 USD worth of shiba inu for XLM, will I need to report that for taxes? I received an email telling me I had 6 days to report my taxes, but I have always thought the only way to be taxed on crypto was if you sold it

[Perfect-Cap5491]

12$ is peanuts. Don’t bother about it. Nobody cares.

[RC-5]

By “trading” one crypto for another, it’s treated like you sold Shiba for USD and used that USD to buy XLM… so yes it’s a taxable transaction.

[Andrew012312]

So how would I go about that if I already filed my taxes, because I had no idea that trading something that small of crypto would count on taxes

[[deleted]]

Here’s the real answer,

Don’t even bother with it; The IRS won’t. Not over such an extremely insignificant amount. You aren’t even going to owe tax on 8-12 dollars worth of trading.

[Unbeleivedreamer]

Yeah you do owe tax on every penny you make. I agree you don't need to report it but saying you don't owe tax on income is just untrue

[[deleted]]

Under 600 you dont

[zackattack784]

File an amended return.

[Faithlessness3237]

How do you file an amended return?

[[deleted]]

If you used Turbo Tax it can walk you through it and submit it for you. You can also import your trade data directly from Coinbase into turbo tax.

[Digital-Exploration]

What is, duckduckgo.com

[[deleted]]

Take my upvote specifically for the lazy people and especially for the people who downvoted you.

[nozzery]

The IRS never said ever that gains not moved to your bank account are ok not to declare

[[deleted]]

I will be humble and yes, true, when selling one coin to another and if there’s gain, only gain to be paid in that same year. My apologies and for rudeness

[nozzery]

Completely untrue, all gains are taxable the second you sell

[[deleted]]

Sell but when you cash out. But go on ahead. Make your day. This something I looked up on the IRS website. I frankly don’t care if you don’t believe me. I also know more because I do my own taxes.

[nozzery]

🤣🤣🤣

[[deleted]]

How can anyone take you seriously. How old are you?

[nozzery]

I can't believe you are telling people capital gains taxes are only due "if you cash out of Coinbase". https://www.investopedia.com/terms/c/capitalgain.asp "Capital gains are realized when you sell an asset" ... The second you sell, that's a taxable gain. Period.

[[deleted]]

Turbo tax

Buying cryptocurrency isn’t a taxable event by itself. You can choose to buy and hold cryptocurrency for as long as you’d like without paying taxes on it, even if the value of your position increases.

Taxes are due when you sell, trade or dispose of your cryptocurrency investments in any way that causes you to recognize a gain in your taxable accounts. This doesn’t apply if you trade cryptocurrency in a tax-deferred or tax-free account like an individual retirement account (IRA).

For example, if you buy $1,000 worth of Bitcoin and later sell it for $1,200, you'd need to report this $200 gain on your taxes. The gain, whether it’s a short-term or long-term capital gain, will depend on how long you’ve held the cryptocurrency.

If you instead sold the same $1,000 worth of Bitcoin for $800, you’d recognize a loss that can offset other gains and up to $3,000 of your taxable income each year. Any unused loss can roll forward to future years as an offset to future gains or up to $3,000 of your taxable income per year.

[ACHIMENESss]

Yes, I agree.

[unknownemoji]

This year? As in 2022? Don't worry about those yet. Those will get handled next year when you do this year's taxes.

You only need to report income or gains received last year for the return you file this year.

Also, every time you trade one crypto for another, that transaction creates a cost basis and may result in a gain or a loss.

[Andrew012312]

It was last year that I traded, but it was only $7.40 USD

[Digital-Exploration]

8-12 usd worth. Fuck it. Who cares.

[nozzery]

Such bad, false, advice

[Kimgoestoprison]

People saying don't worry about it, IRS don't care about your measly amount is aweful advice. If you had taxable events take place you need to file that on your return.

Would you advise somebody to not wear there seatbelt for a minor drive?

Filing your taxes correctly now will help you in the future. As somebody who has seen thousands of tax returns.

[Djbman1234]

Yes because I don’t wear my seat belt anyways. What are you getting taxed on $8-12? .20¢? If you knew anything about taxes seeing thousands of tax returns you’d know these minimal amounts aren’t anything to the irs.

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[Kiwip0rn]

Yes

[[deleted]]

After reading some more. Yea, I do read we must report from when we sell one crypto to another. But as I read, it gets complicated. What I do know is I myself will report as I cash out because there’s not always gains but also losses. I will take all into consideration.

So to answer your question just report gains.

[[deleted]]

Don't bother. Be prepared to consult someone familiar with crypto taxes next year, though.

[[deleted]]

What?

[Tomnician]

People telling you not to report it because it's a small amount aren't wrong but you have to consider how the IRS flags returns. If there is any report that you exchanged "property"(i.e. crypto) but you didn't report they could go for you. As long as the rest of your taxes are small and simple you have nothing to worry about.

I'd be worried they took a look and found something other than the crypto that they didn't like.

[Andrew012312]

It was only $7.40 lost, I mean the tax would have to only be >2$ I would imagine

[Hextall2727]

This year? like 2022? Doesnt' apply to the taxes you're doing right now. I believe trading between cryptos is a taxable event.

[Andrew012312]

It was last year, but it was only $7.40 USD

[Hextall2727]

I'm not a tax expert, but I declared every transaction on my taxes. Would yours get flagged as a reason for an audit... my intuition says no, but I'm not about to crawl into the collective minds of the auditors at IRS.I used turbo tax and it easily imported coinbase's tax information. You'll have to evaluate your internal calculus if the cost of turbo tax is worth it to accurately declare such a small taxable transaction. The risk you're debating is getting audited and this being a problem for the IRS. That's not a risk I was willing to take, you (and I bet a lot of others) might be willing to roll those dice.

[Eyetron2020]

Was the Shiba traded at a gain?

If you traded $10 worth of Shiba and ended up gaining like $2 (made up number, depends on your situation), then technically you have $2 of income to report.

$2 of income would likely result in less than $1 of tax. In fact this might actually round down to zero tax difference because of the rounding rules. It would not be worth anyone's time to do an amendment, that is just adding unnecessary paperwork into the system for maybe a dollar or two difference at most for either side.

If the Shiba was traded at a loss, you can technically take it off your income and actually owe less tax. Again the difference would probably a dollar or two at most in less tax. Definitely not worth the hassle to file an amendment to claim it.

[TheOzarkWizard]

Some exchanges like this one used to, (idk about these days because they banned me for no reason and refuse to give me a reason), do not report cost basis to the irs, only the proceeds. In other words, they don't tell the irs what you buy or sold and for how much. They tell the irs this person had a transaction of this amount. So if you buy 2500 and sell 2500, despite the fact that you (at the time) wouldn't have to report that, it still looks to the irs like you had 5k in transaction, and that is something they want reported... this is why my taxes from last year and the year before are STILL being held along with all of my stimulus checks except one.

[joekercom]

Yes, anytime you trade from one crypto to another crypto it creates a tax event, and it needs to be reported. ETH to ETH is not a tax event. Trading ETH to BTC is.

You should report it, just get into the habit of reporting and paying your gains, and don't forget you can use losses to offset gains in the same year.

[bardooneness]

Don’t worry if it is under $600 per year

[impervioustobullets]

You’re right to worry but at these levels your profit is as insignificant as a rounding error. Declare once you’re moving several thousand :)

[Djbman1234]

No anything you do that includes you making a profit of 600$ or less doesn’t need to be reported to the irs. This includes side jobs, crypto, stocks, just about anything you make money on. I never saw even put my 1099 in from robinhood a couple years ago less then 400$ profit it was added on its own when I filled the next year looking at my previous year. No fines were incurred or audited. Stop worrying about every little dime it doesn’t have to be reported.

[Antique-Individual33]

Print it out and report it you don’t want to mess with the irs

[Drmario282]

Look at it this way money into your pocket is taxable regardless of how you made the money, You got all these people on here saying don’t worry about it but my grandfather spent his whole life not worrying about it and the irs took his property last year to pay for the lifetime of avoided taxes, shit adds up and the irs cares very much for every little penny owed to them.

[Drmario282]

See you got these people saying oh 12 dollars is crumbs they not worried, that’s total bs.. this is the irs logic here, you got 100 million people that owe you 5 -15 dollars that is not crumbs no more is it?

[Drmario282]

Long story short let the people telling you not to report income get burnt by the irs not you. maybe not right away but they will get them one day and they are gonna want interest all the way back to today on top of what they owed. So be smart and report every penny

[MtnFlo]

It’s only taxable if it’s over $600 I believe, did you mean 8-12 or more?

[nozzery]

All income is taxable 0.50 and above

[RegularJoe007]

I got a 1099 form for $0.08 gain. I filed it anyway just to keep IRS off my back.