TaxHawk finally has cryptocurrency filing instructions for the 2018 tax year:
Cryptocurrency
Where you report the income from cryptocurrency depends on how you received it.
Wages: Menu Path:
Income > Common Income > Wages (W-2)Investment: Menu Path:
Income > Common Income > Stocks or Investments Sold (1099-B)Mining: Menu Path:
Income > Business Income > Business Income (Schedule C)Virtual currency, also known as cryptocurrency or altcoin, is a medium of exchange that only exists digitally. It has no centralized authority but uses a decentralized system to record transactions and relies on cryptography to prevent counterfeiting and fraudulent transactions. Examples of cryptocurrencies are Bitcoin, Zcash, Litecoin, and Ethereum, just to name a few.
Income paid in cryptocurrency or earned by buying, selling, or mining cryptocurrency is subject to taxation by the IRS. You can read the direction the IRS has given in
Bulletin 2014-21
.
Where you enter cryptocurrency income depends on how you earned the income. We'll give you an overview of the possible places below.
Wages paid in cryptocurrency should be converted to U.S. dollars on the date of each payment by your employer and reported on your
Form W-2. The conversion to dollars should have already happened before you get your
W-2.
Income paid to you in exchange for goods and services that wasn't wages (for example, you were paid for a service performed as part of your self-employed business in cryptocurrency) should be converted to U.S. dollars on the date of each payment and reported along with any other
self-employment income.
If you held cryptocurrency for investment, it should to be treated as a
capital gain or loss.
If you mined cryptocurrency, earnings from this activity should be converted to U.S. dollars as of the date you receive it and be included as
income. If you were self-employed for the cryptocurrency mining, the income needs to be reported as
self-employed income.
