Schedule D for cryptocurrency gains

Not much has changed in the crypto world when it comes to taxes. At least not in the United States. Be sure to check out our series from last year to get prepared to deal with crypto taxes before April 15th.

If you’ve read through our article on completing IRS form 8949, you’re ready to transfer the amounts from that form to Schedule D. In this brief article, I’m going to dive right in to Schedule D for cryptocurrency gains and IRS Form 1040. Be sure to read our 2017 cryptocurrency capital gains taxes article if you need a deeper discussion.

IRS Schedule D Image of Page 1
Fig 1 Schedule D for Cryptocurrency Gains

Schedule D IRS instructions

You’ll want to look over Schedule D above and read the IRS instructions if you have other gains, losses or carryovers from prior years. There are too many other types of gains, losses, and special situations for us to cover here. We are only interested in showing you how to transfer your cryptocurrency gains and losses from form 8949 to schedule D.

Refer to figure 1 above. Your short-term net gain or loss from part I, line 2 is reported on line 3 (fig. 2) since most exchanges aren’t sending out 1099’s.

IRS Schedule D Image of Part !
Fig 2 Schedule D Part I

Report net long-term gain or loss from form 8949 Part II line 2 on Schedule D line 10 (fig. 3) again assuming you didn’t receive a 1099.

IRS Schedule D image Part II
Fig 3 Schedule D Part II

You need to bring those totals to line 16 Part III Schedule D as shown in figure 4 below. You’ll need to have your form 1040 working copy available to you in order to complete Part III. Follow the IRS steps in Part III with the information needed from your 1040 to complete lines 17-22. There are too many variables for us to cover in this article. Refer to the Schedule D instructions link in earlier paragraphs or consult a tax advisor for more information on this section.

IRS Schedule D Part III Image
Fig 4 Schedule D Part III

You’ll need to transfer the net capital gains shown on line 16 of Schedule D to form 1040 line 13 as shown below in figure 5.

IRS 1040 Page 1 Image
Fig 5 IRS 1040 Page 1 Income

That’s it for reporting capital gains and losses on your cryptocurrency trades. Remember that there is a lot more to completing your tax returns that can’t be covered in a few short articles. Be sure to consult with a tax expert if you need help or have questions. We also have a tax discussion thread for general questions. Keep in mind that no one participating can or will give you specific tax advice. Every situation is different. Hopefully we’ve at least given you enough information to understand the processes and the basics of US tax laws as they apply to cryptocurrency trades. Feel free to leave us feedback in the discussion threads.

Thanks for reading and good luck.