How to Ensure You’re Correctly Reporting Bitcoin on Your Upcoming Tax Return

You’ve found out that you need to report Bitcoin on your tax return that’s due next month – now what? With LibraTax, it’s pretty easy, but don’t take our word for it – check out our video walkthrough:

As you can see, you’re only a few clicks from getting the information you need and ensuring that you’re compliantly reporting Bitcoin on this year’s tax return. We’ve set up integrations with several exchanges to import your transactions automatically:

  • Bitstamp
  • BitGo
  • BTC-E
  • Coinbase

We can also import data directly from any blockchain address you used in 2014 as well. Another option is to use a spreadsheet, from which you can upload your transactions directly into LibraTax.

With any of the above methods, our goal is to make reporting Bitcoin on your tax return as easy as possible.

Once you’ve loaded your transactions into LibraTax, you’re already almost done. For each incoming transaction you’ve loaded, you simply need to classify the transaction as a:

  • Purchase
  • Income
  • Gift
  • Transfer

…and then for each outgoing transaction you simply need to do the same process, and classify each transaction as a:

  • Sale
  • Gift
  • Transfer
  • Donation

From here, all you need to do is press the “Calculate” button, whereafter we’ll tell you exactly what your tax liability (or loss you can write-off) for 2014 is. You can choose from several compliant cost-basis reporting methods to determine what would give you the smallest reportable gain, effectively minimizing your liability, or the largest reportable loss, giving you the biggest reportable write-off.

The last step is to press our “Export Tax Report” button. This will export your information in the format of IRS Form 8949, which is what you need to include with your Schedule D and your tax return. You can also give this to your accountant – he/she will know exactly what to do with it.

It’s that easy, so give it a try! 🙂