Hey there, if you live in the United States and haven't finished doing your crypto tax yet it might be useful to file an extension with the IRS.
Doing your crypto tax takes more time than most people anticipate because crypto tax software is unfortunately not "plug-and-play" yet.
I've had a lot of requests from crypto investors to help get their crypto tax report done by the IRS deadline. But I am recommending anybody who has not finished their crypto tax report yet file an extension.
Here's how to do it.
If you will be using an accountant this year, you can have them file on your behalf.
And if you are filing taxes yourself through Turbotax or a similar software, below are the DIY instructions to file an extension.
1)Determine if you need to file an extension:
The IRS automatically grants a six-month extension to file your tax return if you pay at least 90% of the tax you owe by the original due date (this year is April 18th).
However, if you fail to pay at least 90% of your tax liability by the original due date, you may face penalties and interest.
An extension to file is not an extension to pay. This is an important distinction!
2)Download Form 4868:
To file for an extension, you'll need to fill out Form 4868, also known as the "Application for Automatic Extension of Time to File U.S. Individual Income Tax Return." You can download the form from the IRS website or pick up a paper copy from your local IRS office.
3)Fill out Form 4868:
On Form 4868, you'll need to provide your personal information, and you'll also need to estimate your tax liability for the year and how much you've already paid in taxes. The form will calculate the balance due or refund owed, based on the information you provide.
Alternatively, you can do your tax as normal in TurboTax or TaxAct and use that + your best guess as to crypto tax owed as an estimate on your tax liability.
But most people lost money in '22...so who am I kidding!
4)Submit Form 4868:
Once you've completed Form 4868, you can submit it electronically through the IRS e-file system or mail it to the IRS at the address listed on the form. If you're mailing the form, be sure to send it certified mail, return receipt requested, so you have proof of mailing.
5)Pay any tax due:
If you owe taxes, you'll need to pay them by the original due date to avoid penalties and interest. You can make a payment online using the IRS Direct Pay system, pay by credit or debit card, or send a check or money order with your Form 4868.
6)Keep a copy of your extension request:
Once you've filed for an extension, keep a copy of Form 4868 for your records. This will help you keep track of the new filing deadline and ensure that you've fulfilled your tax obligations.
And if you need help getting your crypto taxes done with less stress, go to https://cryptotaxmadeeasy.com/pages/contact to get a quote.
Good luck!
Matt
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