The Ultimate Cheat Sheet for Crypto Accounting: From TurboTax to Quicken and Beyond

Well, folks, let me tell you, starting cryptocurrency accounting for tax and bookkeeping purposes can be a daunting task, especially if it's your first time dealing with it. But don't fret, I'm here to help put your mind at ease and suggest some tools and methods that will make your life a whole lot easier this tax season and going forward.

First things first, it's important to understand that cryptocurrency, just like any other form of property, is subject to tax laws. The IRS considers cryptocurrency as property for federal income tax purposes, meaning that any gains or losses from buying, selling, or trading cryptocurrency must be reported on your tax return.

Now, I know what you might be thinking, "But wait, isn't cryptocurrency all digital and anonymous? How in tarnation am I supposed to keep track of all my transactions?" Well, my friend, that's where the tools and methods come in.

One of the best ways to keep track of your cryptocurrency transactions is by using a cryptocurrency accounting software. These tools can automatically import and categorize all of your transactions, making it easy to see your gains, losses, and overall net worth. Some popular options include CoinTracking, CryptoTrader.Tax, and TokenTax.

Another helpful tool for keeping track of your cryptocurrency transactions is a cryptocurrency portfolio tracker. These allow you to see the current value of your holdings and track your performance over time. Some popular options include Blockfolio, CoinTracking, and Delta.

TurboTax and Quicken are popular accounting software, but they do not have native support for cryptocurrency accounting. However, both software do have features for tracking investments and capital gains, which could be used for tracking cryptocurrency transactions as well. However, you may need to manually enter the transactions and calculate the capital gains and losses yourself.

TurboTax, for example, has a feature called "Investment Income" that allows you to enter information about stocks, bonds, and mutual funds. You could use this feature to enter information about your cryptocurrency transactions and calculate your capital gains and losses.

Quicken, on the other hand, has a feature called "Investment Transactions" that allows you to track the performance of your investments over time. You could use this feature to track the performance of your cryptocurrency investments and calculate your capital gains and losses.

However, it's worth noting that these software might not be able to import your transaction data automatically and you might have to manually enter all the information, and also the software might not be able to handle certain specific tax forms related to crypto, so it might not be the most optimal solution for crypto accounting.

In addition to these tools, it's also important to keep a detailed record of all of your transactions, including the date, amount, and cost basis (i.e. how much you paid for the cryptocurrency). This will come in handy when it comes time to report your gains and losses on your tax return.

Now, I know that all of this might sound like a lot of work, but trust me, it's worth it in the long run. Not only will it make your tax season a whole lot easier, but it will also give you a better understanding of your financial situation and help you make more informed investment decisions.

Here are some relevant IRS publications and other tax-related reference information that may be useful when dealing with cryptocurrency and taxes:

IRS Notice 2014-21: This notice provides guidance on the tax treatment of virtual currency transactions. It states that virtual currency is treated as property for federal tax purposes and that general tax principles applicable to property transactions apply to transactions using virtual currency.
IRS Publication 544: Sales and Other Dispositions of Assets: This publication provides information on reporting the sale or exchange of property, including virtual currency.
IRS Form 8949: Sales and Other Dispositions of Capital Assets: This form is used to report capital gains and losses from the sale or exchange of property, including virtual currency.
IRS Form 1040, Schedule D: Capital Gains and Losses: This schedule is used to report capital gains and losses, including those from virtual currency transactions.
IRS Virtual Currency FAQs: The IRS has a dedicated webpage that answers frequently asked questions about virtual currency and taxes.
AICPA Virtual Currency Task Force: The American Institute of CPAs has a task force dedicated to providing guidance to CPAs on virtual currency and taxes.
The Cryptocurrency Tax Fairness Act: This Act is a bill that aims to create a de minimis exemption for virtual currency transactions and to make it simpler for individuals to report their virtual currency transactions.

It's important to note that the laws and regulations regarding cryptocurrency and taxes are continually evolving, and I recommend that you check the IRS website periodically for any updates, or consult a professional tax advisor.

In conclusion, starting cryptocurrency accounting for tax and bookkeeping purposes can be overwhelming, but with the right tools and methods, it doesn't have to be. Using a cryptocurrency accounting software and portfolio tracker, as well as keeping detailed records of your transactions, can make your life a whole lot easier this tax season and going forward. Remember, it's always better to be safe than sorry when it comes to taxes, so don't be afraid to seek help from a professional tax advisor if you need it.