TurboTax Desktop Crypto Filing Guide

<div fs-richtext-component="info-box" class="info-box"><div class="flex-info-card"><img src="https://assets-global.website-files.com/65098a145ece52db42b9c274/650c6f4cef4c34160eab4440_Info.svg" loading="eager" width="64" height="64" alt="" class="icon-info-box"><div fs-richtext-component="info-box-text" class="info-box-content"><p class="color-neutral-800">Starting January 1, 2024, the Infrastructure Investment and Jobs Act requires reporting 10,000$+ crypto transactions to the IRS. Yet, the Treasury and IRS deferred digital asset reporting until new regulations are set, promising future guidance and public input on these rules. We keep you informed! </p></div></div></div>

TurboTax, by Intuit, is the most popular tax preparation tool for American taxpayers to file their individual income tax return. Their desktop version provides flexibility to taxpayers looking to file multiple returns or needing additional support for self-employed or business tax reporting. With your Blockpit tax report, you can enter your crypto information to easily file your crypto taxes. In this article, we guide you through the process of reporting your crypto taxes with TurboTax Desktop.

For comprehensive insights into additional crypto tax topics, be sure to consult our guide Crypto Tax USA.

Getting Started

If this is the first time you are using TurboTax Desktop, you will need to spend some time entering your personal information. During this setup, you will be given the option to choose whether you want TurboTax to guide you or let you work on your tax return at your own pace. Regardless of your choice, the input screens will be the same.

One of the biggest advantages of TurboTax Desktop over TurboTax Online is that you can actively flip back and forth between their EasyStep guided input and your actual tax forms, so you can see how your Form 1040 is progressing as you prepare your return. 

As you get started, navigate to the Forms view, and make sure to check yes if you can answer yes to the question: “At any time during 2023, did you: (a) receive (as a reward, award, or payment for property or services); or (b) sell, exchange, gift, or otherwise dispose of a digital asset (or a financial interest in a digital asset)?”

Reporting your Gains

The easiest way to report your cryptocurrency gains and losses is to summarize your gains into short and long term. This will save you a lot of time, but you will need to send an attachment with detailed information.

1. Go to "Investments and Savings" > "Stocks, Mutual Funds, Bonds, Other".
2. Confirm you had investment income, like crypto sales, with "Yes".
3. Indicate if you received a 1099-B; select "No" if not.
4. Choose "I’ll enter a summary for each sales category", input proceeds and cost basis for short-term trades, picking "Short term (Box C)" from the dropdown. This is outlined on page 1 of your Blockpit report. After entering, click "Continue".
5. For additional sales like long-term, click "Add" and follow the same steps. Report short and long-term gains separately.
6. Attachments must be mailed with Form 8453 due to TurboTax Desktop's limitations on electronic filing.

For additional information on filing Form 8949 and Schedule D, check out our article.

Reporting Your Crypto Income 

We now have to enter any other taxable crypto income such as mining, staking, airdrops or hard forks. Keep in mind that if your income is from a trade or business, such as a Bitcoin mining operation, you will need to report as such. For everyone else, how you report this income will depend on whether you:

Received a 1099-MISC

1. Navigate to "1099-MISC and Other Common Income" > "Form 1099-MISC".
2. If you have a 1099-MISC, click "Yes".
3. Enter the payer's details and amounts from boxes 1-18; box 3 is commonly used for crypto.
4. Describe the reason for the 1099-MISC, like "staking" or "crypto rewards", then continue.
5. Skip irrelevant questions about 1099-MISC by choosing "None of these apply".
6. If the income wasn't similar to your main job, select "No, it didn’t involve work like my main job".
7. Confirm the frequency of such income as "I got it in 2022".
8. For questions on earning intent, since most crypto income isn't from business services, select "No, it didn’t involve an intent to earn money".
9. Repeat for other 1099-MISC forms or select "No" to proceed.

Did not receive a 1099-MISC

1. Go to "Less Common Income" > "Miscellaneous Income, 1099-A, 1099-C" and select "Other reportable income".
2. Answer "Yes" to having other reportable income.
3. Describe your income as "Various Crypto Income" and input the total from your Blockpit tax report. If you've received a 1099-MISC for part of your crypto income, ensure not to double report it.

For further details on handling 1099 forms, refer to our guide on Crypto Forms 1099.

Capital Loss Carryovers

If you filed with TurboTax in the prior year and you either used that return or imported your TurboTax Online return, any capital loss carryovers should be automatically rolled over into this year. However, it is a good idea to verify that these amounts are correct as they impact your current year tax return. If this is your first time using TurboTax Desktop, you will need to enter this information regardless.

1. In the income section, navigate to the “Investments and Savings” section and select “Capital Loss Carryover”.
2. Click “Yes” on the following screen, after which you will be asked if you know your carryover amounts. You can generally find your short and long-term capital loss carryovers included with the additional information provided by most tax tools and tax preparers. If you do have these amounts, enter them on the following screen.
3. If you do find your carryover amounts, enter them directly on the following screen. If you do not have your exact carryover amounts, you will need your 2021 Form 1040 and the following amounts:
   Schedule D line 7 – Net short-term capital gain or (loss)
   Schedule D line 15 – Net long-term capital gain or (loss)
   Schedule D line 21 – Allowable loss
   Form 1040 line 15 – Taxable income
   Alternative Minimum Tax (AMT) differences for carryovers
   Form 6251 line 4 – Alternative minimum taxable income
4. Click on “Continue” and if you have already entered your capital gains or losses for 2022, TurboTax will summarize how your carryover can be used this year, and what you can carry forward to 2023.

Using Crypto Tax Software to Simplify Compliance

Crypto tax software significantly simplifies optimizing cryptocurrency taxes. Navigating the complexities of trades, staking, and airdrops becomes straightforward with the right tools. Manual management is cumbersome and error-prone, risking penalties for non-compliance.

Blockpit's software streamlines this process. It offers seamless integration through API, Public Keys, or CSV, compiling all cryptocurrency transactions efficiently. It automates tax calculations according to the latest regulations, ensuring compliance. Moreover, Blockpit provides expert support to ease the tax filing process.

By using Blockpit, you can focus on maximizing investments instead of tax reporting complexities. It ensures compliance is straightforward, offering a stress-free approach to managing crypto taxes.

Optimize & File Your Crypto Taxes With Blockpit

Blockpit creates the most comprehensive crypto tax reports in PDF format. The report provides information about all your balances and transactions and can be used as proof of origin with banks or tax advisors. It contains all relevant transactions of your account in the selected tax year and shows details such as timestamp, amount, asset, costs and fees of the individual transactions.

Using Blockpit couldn’t be easier:

1. Import your transactions

Blockpit offers direct integrations for crypto exchanges, wallets and DeFi protocols. Automatically import your transactions via API integration, wallet address synchronization, or by manually uploading an Excel file. 

Discover all crypto integrations

2. Validate & Optimize

Blockpit offers smart insights and suggestions to optimize your tax report, fix issues, add missing values and to validate your transactions.

3. Generate your tax report

Generate your compliant tax report with the click of a button. Our tax engine calculates your tax report on the basis of the US tax framework.

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