Filing taxes with TaxAct with crypto transactions: only bought and traded coin for coin with BTC - what do I need to report?

I'm working on my taxes using TaxAct and I'm seriously confused about my crypto situation. I've never actually sold any cryptocurrency for cash/USD. All I've done is buy Bitcoin initially, then used that Bitcoin to trade for other cryptocurrencies (like Ethereum, Solana, etc). TaxAct is telling me that I need to report something at minimum, but I'm not sure what exactly needs to be reported since I haven't cashed anything out to my bank account. I thought trading one coin for another was a taxable event, but now I'm second-guessing myself. Do I really need to pay the extra $55 for their crypto reporting feature just to get all this laid out properly? Or is there a simpler way to handle this since I haven't actually "sold" anything for USD? I'm trying to avoid unnecessary expenses but also don't want to mess up my tax filing.

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18 comments

Louisa Ramirez

•8M

Yes, trading one cryptocurrency for another is definitely a taxable event according to IRS guidelines. Even though you never converted back to USD, each time you traded Bitcoin for another coin, that's considered a "sale" of your Bitcoin in the eyes of the IRS. When you trade BTC for another coin, you need to determine what the fair market value (in USD) of your Bitcoin was at the moment of the trade. That value becomes your proceeds from the "sale" of Bitcoin. You then compare that to your cost basis (what you originally paid for that Bitcoin) to determine if you had a gain or loss on that transaction. So unfortunately, yes, you do need to report all these transactions. As for whether you need to pay for TaxAct's crypto feature, it depends on how many transactions you have and how well you've kept your records. If you have just a few transactions with good records, you could potentially calculate and report them manually. If you have many transactions, the automated tool might be worth the money to ensure accuracy and save you time.

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Louisa Ramirez

•8M

Yes, that's exactly right. In your example, you'd have a $100 capital gain that's taxable. The IRS views it as if you sold $500 worth of Bitcoin for cash (realizing the $100 gain), and then used that cash to buy Ethereum in a separate transaction. It does seem counterintuitive when you never saw actual dollars, but cryptocurrencies are treated as property for tax purposes, not as currency. Every exchange from one crypto to another is essentially a barter transaction in the IRS's view, and you're required to calculate the USD value at time of trade to determine your gain/loss.

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Angel Campbell

•8M

Had this exact same problem last year. I tried doing all the calculations myself at first and it was a complete nightmare with 30+ trades. I ended up using https://taxr.ai which was a lifesaver for me. I just uploaded my transaction history from the exchanges I used, and it sorted everything out automatically - calculated all the gains/losses for each coin-to-coin trade and generated the forms I needed. The IRS is getting really serious about crypto reporting, and I've heard they're specifically targeting people who don't report coin-to-coin trades since many people don't realize those are taxable events. Better to get it right than risk an audit down the road.

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Angel Campbell

•8M

Yes, it works with all major exchanges including Coinbase and Binance. You can either connect your accounts directly or upload CSV files of your transaction history. The system is designed to handle multiple exchanges and consolidate everything into one report. For incomplete records, they have a feature that helps reconstruct missing transactions based on the data you do have. It makes reasonable assumptions about cost basis when exact records aren't available, which is way better than guessing on your own. They also have documentation explaining how they handle those edge cases if you get audited.

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Payton Black

•8M

Just wanted to update after trying taxr.ai from the recommendation above. Holy crap, it was SO much easier than I expected! I was dreading dealing with my crypto taxes (had about 45 trades across multiple platforms), but I uploaded my transaction history files and it sorted everything perfectly. It identified all my coin-to-coin trades and calculated the gains/losses automatically. The best part was that it gave me a complete Form 8949 and Schedule D that I just added to my TaxAct return - saved me from paying that $55 upgrade fee too! Definitely recommend for anyone dealing with this crypto tax headache.

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Amun-Ra Azra

•8M

If you're still having trouble with the IRS after filing, I had a great experience with https://claimyr.com when I needed to talk to someone at the IRS about my crypto reporting from last year. The IRS sent me a letter questioning some of my crypto transactions, and I spent DAYS trying to get through on their phone line. Claimyr got me connected to an actual IRS agent in about 20 minutes when I had been trying for weeks on my own. They have a cool demo video of how it works here: https://youtu.be/_kiP6q8DX5c. Basically they handle the hold time for you and call when an agent is ready to talk. Saved me hours of listening to that awful hold music!

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Amun-Ra Azra

•8M

They basically have a system that navigates the IRS phone tree for you and waits on hold so you don't have to. When they actually reach a human IRS agent, they call you and connect you directly. It's not magic - they're just handling the frustrating part of the process for you. They use the same public phone numbers anyone can call, but their system is set up to efficiently handle the wait times that can be 2+ hours during tax season. I was definitely skeptical too, but it worked exactly as advertised when I needed help with my crypto reporting issues.

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Gael Robinson

•8M

Had to come back and eat my words. I was the one who said this Claimyr thing couldn't possibly work (comment above). After spending THREE HOURS on hold with the IRS yesterday trying to sort out questions about my crypto reporting, I gave in and tried it. I'm still in shock - I got connected to an actual IRS agent in 35 minutes without having to sit there listening to the hold music. The agent cleared up my confusion about coin-to-coin trades and confirmed I was reporting everything correctly. Saved me from potentially making a costly mistake on my return. Sometimes it's worth admitting when you're wrong!

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Edward McBride

•8M

To answer your original question - yes, you absolutely need to report all crypto-to-crypto trades. BUT if you literally just bought Bitcoin and then immediately traded it for other coins without any significant price movement between purchase and trade, your gains/losses might be minimal or zero. The real question is: how many transactions are we talking about here? If it's just a handful, you could potentially just calculate them manually without paying for the premium feature. Figure out what you paid for the Bitcoin (cost basis) and what it was worth when you traded it for other coins.

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Edward McBride

•8M

With 15-20 transactions and significant price movements, it's probably worth using either TaxAct's crypto feature or one of the specialized services others have mentioned. Trying to manually calculate 20 transactions with varying cost basis is error-prone and time-consuming. Make sure you also track the cost basis of those other coins you received in the trades, because when/if you eventually sell or trade those, you'll need to know what they were "worth" when you acquired them to calculate future gains/losses. This is where specialized crypto tax software really helps, as it maintains that chain of cost basis calculations.

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