Cryptocurrencies are generally taxed in two ways: capital gains/losses and ordinary income.
When you dispose of cryptocurrency by selling it or trading it away, you realize a capital gain or loss.
When you earn crypto income through interest, staking rewards, mining, airdrops and other crypto rewards, you realize ordinary income based on the fair market value of your crypto at the time of receipt. This ordinary income can be reported on different tax forms, depending on the income type and your specific tax situation.
Reporting Capital Gains and Losses in TurboTax
CoinLedger exports capital gains/loss files formatted for TurboTax Online or TurboTax Desktop/CD version. TurboTax reads the data in the CoinLedger capital gains/loss file to generate your completed Form 8949.
It's important to note that the TurboTax capital gains/loss file does not contain your crypto income distributions earned throughout the year. This is because cryptocurrency income has to be entered into separate section(s) within TurboTax.
Reporting Crypto income in TurboTax
Within CoinLedger you can view your total taxable income under Taxable Income display on the Tax Reports page. It will show your total taxable income as well separate totals for each income type.
From there you will need to decide how you want to input each income type into TurboTax. This guide is not intended to function as tax advice, so if you are at all unsure of how to enter your crypto income within TurboTax you should consult with a tax professional.
The following sections walk step-by-step through the process of entering crypto income into different sections within TurboTax.
1099-INT Section - a section where interest can be reported
Miscellaneous Income section - a section where "other income" can be reported
These instructions are based on TurboTax's public support guides. You can also check out expert advice from TurboTax here.
Entering Crypto Interest Income into the 1099-INT Section in TurboTax
Step 1:
Navigate to Wages & Income and select Add other income
Step 2:
Select Interest on 1099-INT and then click Yes.
Step 3:
Select Change how I enter my form and then select Type it in myself.
Step 4:
Enter the name of the exchange or platform where you received crypto interest distributions and then enter the total amount of your crypto interest income in USD. Then select Continue.
From within CoinLedger this is displayed in Step 4 under the Taxable Income display.
Step 5
You have now entered your crypto interest income! Answer the other questions if they apply and then select Continue.
See step-by-step instructions for this process below!
Entering Other Crypto Income into the Miscellaneous Income section from within TurboTax
Step 1:
Navigate to Wages & Income and select Add more income.
Step 2:
Scroll down to the bottom of the page and select Less Common Income.
Step 3:
Scroll down and select Miscellaneous Income, 1099-A, 1099-C.
Step 4:
Select Other reportable income.
Step 5:
Select Yes at this stage.
Step 6:
Enter the amount in USD for the crypto income received and then click Continue.
Step 7:
When this screen pops up again, you can select No if you have no other crypto income to report.
You will know that the income has been successfully imported if you see Revisit. Click Continue to move on.
See step-by-step instructions for this process in the video below!