How To Pay Taxes on Bitcoin Earnings From Trading and Mining

What's up, YouTube? Today I'm back to talk about bitcoin and taxes, everybody's favorite subject No sarcasm

I know there's a lot of people out there that are wondering how to go about the tax situation if you're in the United States They're curious how it works, what they need to do to get started as tax season is coming upon us very, very soon I want to get some information out there that I hope you guys Again, I'm not a financial advisor, a tax professional attorney, anything like that I'm just your normal guy that's trying to figures things out as we go We don't have a lot of information from the IRS on how to go about things, so we're just learning as we go and in a sense This information, take it with a grain of salt Make sure you talk to your financial advisor about what you should and should not report, how you should report it, things like that

I'm just going to show you some tools and some ways to get the ball rolling Before I get into that, if you enjoy this video, you want to see more videos like this one, don't forget to hit that like button Also, don't forget to subscribe to my channel and turn on post notifications by hitting that bell notification icon next to the subscribe button Thank you guys for all your support Let's go ahead and jump into the video

The website that I'm on right now is called Bitcoin Tax You can go to bitcointax and sign up for a free account They do have different level accounts I have a premium account

With the premium account you do get a couple additional features, but I believe everything that I do in this video, you'll be able to do with the free account as well without having to sign up the paid account The first thing I want to about is getting your information out of coinbase into Bitcoin Tax It's very simple You just go to the training tab Over here on the right you'll see import trades

Now, you have all these different places that you can import from Some of them you can import automatically without having to do anything really extra Some of them, it will give you instructions Now, while you can to the automatic import, I've had better luck with doing it this manual way If you follow these instructions here, what it tells you to do is to go to your coinbase account, and then up here at the top you have all these options

You're going to go to tools Once you get to tools, you're going to go reports here Then, you're going to click on new report When you click on new report, you're going to make sure you're on the bitcoin wallet if that's the coin that we're talking about You can import all the different ones, but we'll do the bitcoin wallet

Then you're going to go to the past year, so last year Actually, year to date Sorry Last year would have been 2016 Then, up here under type, you're going to go to buy, sales and merchant payouts

That's what it tells you to do here Buy, sales and merchant payouts You're going to take that and you're going to hit create report It will say pending Sometimes you have to refresh the page, sometimes you don't

You'll see the download button up here next to the one that you did, so you can save that We'll call that CB2 Then you can go back to the Bitcoin Tax website, and here you need to select what currency We did BTC Then, you click right here to choose the file

We'll choose CB2, the one that we just downloaded 63 trades imported That's all you have to do, and it imports all the trades right here Now, if you mine, say on Genesis Mining, you mine from home, HashFlare, things like that, it's going to get a little bit more complicated Unfortunately, there's not an automatic import and to my knowledge there's not a way to easily export information from either one of those platforms

What you're going to have to do is get all your daily payout information from Genesis and from HashFlare or your mining that you've been doing on your own, however you've been doing it You're going to need to collect that information You're going to need to put it into a spreadsheet In that spreadsheet, you can just do a CSV file with a date column and action column, which you'll choose, you'll put mining underneath that Then, you'll choose the symbol of the coin that you're mining, whatever that was, and then the volume which is the number of satoshis or whatever, not the dollar amount

Then, you're going to need, potentially it might be good to have it, but I think this tool's going to go it for you You're not going to have to worry about it, but we'll put some dummy information in here just in case Let's say this is from Genesis Mining payout, and we'll put in some fake address here Then, we'll say we received 125

Enter the value if this was received as payment for an amount in traditional currency or the fair value of the item or service Leave blank to use the daily average price It is going to pull the price for you, and we'll hit add Now, see here, it added that and it did convert it for you to the fair market value for that day that you did the mining The easiest way to do this is probably going to be to put it in a CSV file and then import it

You can probably just copy and paste some of the information from the website itself into a spreadsheet and break down the data there See if I'm not getting kicked out of here and have to log back in I'll show you What you'd want to do is, is on your log here, you can do show all entries We'll do show all, and then you could take this sha-256 payout, copy that and we'll call it down to the very bottom

Paste that in here, so then it only shows the payouts that you're receiving in BTC You can do this with the maintenance fee as well if you're going to be deducting the fee that you received since it comes out after you get your actual payout You could copy this information and then sort it out so that it's in the proper columns, and then import this in to make it simpler You could do the same thing with Genesis Mining as well to make it a little easier on you with getting this information into the Bitcoin Tax website That's going to be your income and any other income if you got paid

In my opinion, I think the payouts from the lending platforms may fall into this income area as well You'd be putting things from BitConnect and platforms like that in here, but this trading one's going to take care of the majority of what you got going on Especially if you've been taking money out of coinbase, you definitely want to do this trading part If you've been doing mining, you definitely want to enter that into the income if you're going to report it, which based off the current law and everything that's going on, you probably should be to be on the safe side, but completely up to you Talk to your tax professional about that

You also have spending If you were spending any amount of money for purchases like from purse or something like that, then you're going to want to make sure that you put these in here as well We'll do one for example Put a fake law address in here We'll see it was from purse

We'll say we spent 05 and we will add that Again, it does the daily fair market value Now what you're going to want to do is go over to calculate, and you can just get a rough overview The estimated tax use in the first in, first out method, which based off of what I've read from the IRS, that's the method that you're going to be going with

This will show your short-term gains or losses This will also include income if I'm not mistaken, and then tax, so 33% This will change depending on the amount of income and what tax bracket that you're falling into, so you can adjust that there You can also change it to one of these other methods if you would like, but as you can see in my example it doesn't make any difference which one that I use in my specific example Now, one other thing I want to mention that I forget to mention is bittrex

If you have money on an exchange that you've been trading with, you're going to want to put that in here too Click on bittrex, and it will tell you click on orders at the top right, and then click the load all Click on orders You'll come to this screen You'll click on load all, and then you can click on this CSV file to download it, and then you will import it by clicking here and just importing the file like we've did with coinbase

All right After you've calculated it, and you've got rough idea, you can go to your reports Now, these reports is how you're going to get information into your tax software or print out the needed tax documents They have these different documents here In a future video I'll be show you how to get this information into TurboTax

The Form 8949 statement is something that you'll probably need The CSV may be handy as well just to keep for your records The income, you also have the ability to download that I believe that is just in a CSV file It will look just like that

Then, let's see This is just our closing position Just the overall view of where we ended up, our cost basis into these coins, and then what amount that we earned total That's pretty much it It's pretty straightforward

This is the easiest way that I have found to figure out your taxes and to be able to get the forms that you're going to need to file your taxes appropriately Again, make sure that you speak with a tax professional before just taking this as it is They're may be ways that you can avoid having to claim every little penny that this is going to put in there There may be exemptions and write-offs and things like that that you can take advantage of that only a certified tax professional is going to be able to help you with I would prefer someone who dealt with bitcoin or at least a lot of trading type of accounts, things like that

Certainly they know exactly what they're doing with Not your general going into Walmart and you've got that tax person sitting there I wouldn't go to somebody like that because they're probably not equipped to handle this type of income and things like that to help you the most If you do need to break down the costs or the earnings that you have and get them into US

dollar Let's see I think I have that on this one

What could do, let's say you just have a big list of BTC amounts and you need to get the dollar amounts, one thing that you could do is is you can get a list of the closing price of bitcoin for every day for the entire year Then, when you fill out this sheet and you put a day in here, like I'll change this day, we'll say to the 29th You'll see that my dollar amount changed That's because the sheet is searching through all these prices for the specific date and then putting in the dollar amount conversion from the BTC to dollar I'll leave the link to this sheet, copy of it down in the description

That way, you guys can download it if you want to use it, try it out, or if you need it for anything I feel like if you use the website here, it's going to handle most of that for you, but some of you may need that for your records or for something else that you're doing, so it can come in handy You can get the full list of bitcoin prices by going to CoinDesk It's not loading right now I had to pull it up in Microsoft Edge

What you could do is you go to this page and then you change the date here so it's the full year, and click on export and it will give you that CSV file that has the entire list Depending on your date format, you may need to go in here and format the cell and choose this specific type date formate Because if the date formats don't match up, sometimes it causes issues with the search that it's doing to find the dollar amount I'll leave the link to this like I said down in the description in case any of your guys want to use it That's really all I got for you

Just wanted to go over some quick information about some tools that you can use and how you can use them specifically to be able to file your taxes or at least get the information that you need to file them If you have any questions or comments, please leave a comment down below Again, I appreciate all your support If you haven't already subscribed, make sure you do that now We're almost at 10,000 subscribers, and I'll be announcing a pretty big giveaway, one that's bigger than the one I've done before

Make sure that you're subscribed, that you have the post notifications turned on, you follow me on Twitter That way, you don't miss out on that giveaway and future crypto currency and tax videos that I may do Again, hope everybody's having a great weekend Hope you're having a blessed day Thanks a lot

Have a good one