If you have crypto loans, then you may have some questions about how those are taxed. There may also be some confusion about how that will look in your TaxBit account. The IRS expects all crypto disposals to be recorded on the IRS form 8949, no matter how you acquired it, so in this guide, we’ll go over ways to include crypto loan data in your TaxBit account to keep your tax forms as accurate as possible.
If you have received a line of credit or any other type of loan where you were paid in crypto, you will need to record that in TaxBit in order to correctly account for cost basis on any disposals of that crypto. At this time, TaxBit doesn't have completely native support for these types of transactions, but we have developed a method to ensure that you stay compliant with the IRS for cryptocurrency taxes.
Here’s how loan transactions should look in your account for accurate reporting:
- Crypto loan received: This should be recorded as a "Buy" transaction in TaxBit.
- "Moving" the asset to a bank: This action is considered a "Sale" in TaxBit, and it is a disposal that will need to be recorded on your IRS 8949.
- "Exchanging" the asset for a different crypto: This is considered a "Trade" in TaxBit. Trades are also considered a disposal and will be included in the 8949 that TaxBit creates for you.
- Transferring crypto to a different exchange: This would need to be recorded as a "Transfer Out" from the original exchange followed by a separate but corresponding "Transfer In" to the next source.
Paying off your loan: There are two ways that you can do this, and how those would be reported depends on whether you are paying the loan back in crypto or in USD.
- If you are paying the loan back with crypto, then those transactions should be recorded as an "Expense" in TaxBit.
- If you are paying the loan back with USD, then there would be nothing to record in TaxBit.
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