How to Enter Cryptocurrency in TurboTax Premier 2017: A Comprehensive Guide

Introduction:

Cryptocurrency has gained significant popularity in recent years, and many individuals and businesses are investing in it. As tax season approaches, understanding how to report cryptocurrency gains and losses on your tax return is crucial. In this guide, we will explore how to enter cryptocurrency in TurboTax Premier 2017, ensuring you accurately report your taxable income.

Section 1: Understanding Cryptocurrency and Taxes

1. What is cryptocurrency?

Cryptocurrency is a digital or virtual currency that uses cryptography for security. It operates independently of a central authority and relies on a decentralized network to record transactions.

2. How is cryptocurrency taxed?

Cryptocurrency is treated as property for tax purposes. This means that any gains or losses from cryptocurrency transactions are subject to capital gains tax. Understanding the tax implications of cryptocurrency is essential for accurate reporting.

Section 2: Setting Up TurboTax Premier 2017

1. Installing TurboTax Premier 2017

To begin, ensure you have TurboTax Premier 2017 installed on your computer. You can purchase the software online or from a reputable retailer.

2. Creating a TurboTax account

Once the software is installed, create a new account by providing your email address and creating a password. This account will allow you to save your progress and access your tax return information.

Section 3: Entering Cryptocurrency in TurboTax Premier 2017

1. Navigating to the Cryptocurrency section

In TurboTax Premier 2017, locate the Cryptocurrency section within the tax return form. This section is specifically designed to help you report cryptocurrency gains and losses.

2. Entering cryptocurrency transactions

To enter your cryptocurrency transactions, click on the "Add Cryptocurrency" button. You will be prompted to enter the following information:

- Date of the transaction

- Description of the transaction

- Type of cryptocurrency involved

- Quantity of cryptocurrency

- Price per unit

- Total amount

Ensure that you accurately enter all the required information to reflect your cryptocurrency transactions.

3. Reporting cryptocurrency gains and losses

TurboTax Premier 2017 will automatically calculate your cryptocurrency gains and losses based on the information you provide. The software will then display the total gain or loss for the year.

4. Adjusting for cost basis

If you have acquired cryptocurrency through previous transactions, you may need to adjust the cost basis for your current transactions. This can be done by entering the cost basis per unit of cryptocurrency in the designated field.

5. Reporting cryptocurrency on Schedule D

Once you have entered all your cryptocurrency transactions, TurboTax Premier 2017 will automatically generate Schedule D for you. Schedule D is used to report capital gains and losses from property transactions, including cryptocurrency.

Section 4: Reviewing and Submitting Your Tax Return

1. Reviewing your tax return

Before submitting your tax return, thoroughly review all the information you have entered, including your cryptocurrency transactions. Ensure that everything is accurate and complete.

2. Submitting your tax return

Once you are satisfied with your tax return, you can submit it directly through TurboTax Premier 2017. Follow the on-screen instructions to complete the submission process.

Section 5: Common Questions and Answers

Question 1: Can I enter cryptocurrency transactions manually in TurboTax Premier 2017?

Answer: Yes, you can enter cryptocurrency transactions manually in TurboTax Premier 2017 by clicking on the "Add Cryptocurrency" button and providing the necessary details.

Question 2: What if I don't have the cost basis for my cryptocurrency transactions?

Answer: If you don't have the cost basis for your cryptocurrency transactions, you may need to consult your records or reach out to the exchanges or platforms where you acquired the cryptocurrency.

Question 3: Can I report cryptocurrency transactions on a different schedule if I prefer?

Answer: No, TurboTax Premier 2017 specifically uses Schedule D to report cryptocurrency gains and losses. It is important to follow the software's instructions to ensure accurate reporting.

Question 4: Will TurboTax Premier 2017 automatically calculate my capital gains tax?

Answer: Yes, TurboTax Premier 2017 will automatically calculate your capital gains tax based on the information you provide. However, it is crucial to review the calculations and ensure they are accurate.

Question 5: Can I import cryptocurrency transaction data directly into TurboTax Premier 2017?

Answer: Yes, TurboTax Premier 2017 offers the option to import cryptocurrency transaction data directly from supported exchanges or platforms. This can save time and reduce the risk of errors.

Conclusion:

Entering cryptocurrency in TurboTax Premier 2017 is a straightforward process that ensures accurate reporting of gains and losses. By following the steps outlined in this guide, you can navigate the software and provide the necessary information to comply with tax regulations. Remember to review your tax return carefully before submitting it to avoid any potential issues.