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I have some questions on cryptocurrency tax. From what I…

Customer Question
I have some questions...

I have some questions on cryptocurrency tax.

Accountant's Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.

From what I understand, short-term gains in crypto is taxed like normal income.

Accountant's Assistant: Is there anything else important you think the Accountant should know?

However, when I try to prepare my tax online with softwares like taxact, my crypto gain (about a few thousand dollars) seem to be taxed at 100%. This is very confusing to me and that's what I need to figure out.

Submitted: 1 month ago.Category: Tax
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Customer reply replied 1 month ago
Let me expand on the details a little bit.If my understanding about crypto tax is correct (short term gain is taxed as ordinary income), then my $4500 crypto gains in 2017 should be taxed about $450 at 10%. I was preparing my tax on taxact and after entering everything on my W2, my estimated refund was around $9500. However, after I added my crypto gains with form 1099-B, my return went way down to about $4500. It's as if my crypto gains were taxed at 100%. I tested the taxact software that if I added $4500 on my ordinary income (as if this extra $4500 was from my W2 but not entered through 1099B), my estimated tax return would still be about $9,000. Why does the same amount of extra income (one entered on top of my ordinary income and the other entered by 1099B) make my tax return to change from getting $9000 to $4500?
Answered in 6 hours by:
3/11/2018
Tax Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 1 month ago
Chad EA, CFP ®
Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional
Category: Tax
Satisfied Customers: 2,169
Experience: Federally licensed IRS Enrolled Agent, Certified Financial Planner (R), MBA
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Tax Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 1 month ago

The short term capital gains is added to your W2 income as part of the total calculation for determining your adjusted gross income and then your tax bracket is determined.

Your W2 income goes on line 7 of the 1040 and capital gains goes on line 13.

___

The information from your 1099B is used to complete schedule D and the results are placed on line 13 of the 1040

Please let me know if this has answered your question or if you have any additional questions.

When you have no further questions a positive rating of 5 stars is much appreciated.

Thank you!

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