Every year, the deadline to file taxes seems to come out of left field. If you find yourself in a pinch to file your cryptocurrency taxes, you’re not alone. If you find yourself in this position this upcoming tax season, know that the IRS allows you to file for a 6-month extension to give you the additional time that you need.
As a crypto tax CPA, we’re here to help you navigate the process of filing crypto tax extensions. We’ve outlined what you should know below.
Why is an extension needed?
Filing an extension will give you an additional six months to complete your taxes. While this gives you more time to file, this isn’t a deferral if you still owe the IRS money. Keep in mind that you won’t get more time to pay what you owe; the extension is only to give you more time with the paperwork. Even if you’re not completing your tax filing, you’ll still need to pay your estimated taxes.
If you don’t owe any money on your crypto taxes, you won’t need to file an extension. However, you won’t get a refund until you do. Some people need more time to pay the taxes, and it’s possible to apply for a payment plan to give yourself more time and avoid future penalties.
For 2023, the tax deadline is April 18th. With an extension, the new filing date is pushed to October 16th. Even if you need to file late, remember that a late filing is better than no filing at all.
Steps on extending your return
It’s important to note that each state has different rules and regulations regarding crypto tax extensions. These rules are always subject to change each year, so be sure to consult with a crypto tax CPA for guidance in this area.
We’ve outlined a general checklist for you to follow when approaching this process:
- Determine if your state requires additional paperwork
- Officially complete the extension request and be sure to keep track of your confirmation number
- If needed, make a request with your state
- Estimate your crypto tax obligation. This process can be tedious and tricky if you haven’t been keeping track of your transactions. This is where a crypto tax CPA can provide a lot of value to the process
- Start to make estimated payments. If you’re unable to make the payments, you can request a payment plan with either the IRS and/or your state
- Complete your tax filing by the deadline to avoid the penalty for filing late
Get help from a crypto tax CPA
If you’re considering filing a crypto tax extension this year, you don’t have to go through the process alone. We know that it can be overwhelming to navigate cryptocurrency if you’re not well-versed in this area. Our experts at Founder’s CPA are here to help you through the above steps and ensure your filings are accurate. Take advantage of our free initial consultations to get started.
