If you haven’t had a chance to file your cryptocurrency taxes this year, know that you aren’t alone! Before you panic, know that you can file a crypto tax extension that will give you an additional six months to file your tax return. But even so, if you missed the extension deadline, you can still submit an amended tax return. If you think that you could benefit from this, you can work with our cryptocurrency CPA for guidance every step of the way.
Below, we will define a crypto tax extension and what the process is for filing an amended tax return. Of course, our team at Founder’s CPA can help you with this process and answer any additional questions that you have.
What Is a Cryptocurrency Tax Extension?
If you need more time to assemble the right documents and file your tax return, an extension makes it possible to do so. Many investors take advantage of extensions as it helps them to avoid any uncertainty relating to taxation issues such as liquidity pools, NFTs, staking, and lending. In the case that you have deposits that are locked on platforms such as Voyager, FTX, or Celsius, you can submit an extension to extend your return period so you can get clarity from the IRS on those tax implications.
Documents to File the Extension
Our cryptocurrency CPA has outlined a checklist of some steps and documents that you’ll want to assemble:
- All tax documents and a copy of your previous tax return
- Put together an estimate for any unaccounted income that you have for the previous year
- Compile your cryptocurrency wallets and reference your transactions
- Double-check that your payment information from your tax withholdings, overpayments, and estimated tax payments is up to date
You’ll need to have filed your extension by the same date that taxes were due: April 18th, 2023. In the case that you’re late in filing, you could be subject to interest and penalties from the IRS. In this case, we recommend submitting an amended tax return.
3 Steps to Amend Your Tax Return
Thankfully, the process for amending your tax return is straightforward. First, you’ll need to calculate your tax liability. This means determining your capital gains and any income that you made from cryptocurrency in the previous year. This means you’ll need access to the records of your income events and disposals.
Next, you’ll need to complete Form 1040X which is the Amended U.S. Individual Tax Return form. This form is simple to navigate and only requires new or updated information.
The last step is mailing your tax return amendment to the IRS. If the tax bill is higher, you’ll want to include the additional payment in the return. It could take the IRS anywhere from 8-12 weeks to process the amendment, so be patient.
Get Started with Founder’s CPA Today
Whether you need a cryptocurrency CPA to help you through this process or you’re simply looking for industry expertise in the cryptocurrency space, our team at Founder’s CPA is here for you. Contact us for more information and for a free consultation.
