Help with TurboTax Digital Asset question while filing... confused!

Thanks for the explanation! But what if I received like $5 of free Bitcoin from Coinbase last year when I signed up just to check it out? I never did anything with it and honestly forgot about it until now. Does that tiny amount count?

Yes, technically even that $5 of free Bitcoin would count. The question asks if you "received" any financial interest in digital assets, which would include free crypto. So in your case, you should answer "Yes" to the digital asset question, and then you'll need to report that $5 as income. For small amounts like this, it won't significantly impact your taxes, but it's important to answer accurately to avoid any potential issues with the IRS.

Is this tool legit? I'm also confused about this same question because I have some stocks through E*TRADE but also bought $50 of Dogecoin last year just for fun. Would taxr.ai tell me how to handle this mixed situation?

Does taxr.ai actually connect to TurboTax somehow or does it just give you general advice? I'm confused on several TurboTax questions, not just the digital assets one.

Yes, it's completely legitimate! I was skeptical too at first. The tool doesn't connect to TurboTax directly, but it analyzes your tax situation and gives specific guidance. For your Dogecoin situation, it would tell you to answer "Yes" to the digital assets question and guide you on reporting that $50 investment correctly. It gives personalized advice based on your specific situation, not just general information. I had several confusing TurboTax questions besides the digital assets one, and it helped clarify all of them, even some tricky education credit questions I had.

How does this even work? The IRS phone lines are notoriously impossible to get through. Is this just another paid service that doesn't actually deliver?

Sounds like a scam. No way anyone is getting through to the IRS in 20 mins during tax season. I've literally spent days trying to reach them about my missing refund from last year.

It uses a system that continually redials and navigates the IRS phone tree until it gets a spot in line, then it calls you when an agent is about to be available. It's not doing anything you couldn't do yourself if you had unlimited time and patience - it's just automated. It's definitely not a scam. I was super skeptical too, but it worked exactly as advertised. I got connected to a real IRS agent who answered all my questions about reporting some bitcoin I mined last year. The 20 minutes was my actual experience - way better than the 3+ hours I spent on hold last year trying to do it myself.

So what about those stock trading apps that give you free fractional shares as bonuses? Like I got $10 of Apple stock for signing up. Is that different from getting free Bitcoin?

Yes, that's completely different. The free fractional shares of traditional stocks (like your Apple stock) aren't considered digital assets for this tax question. Those are still traditional securities that happen to be held electronically. The digital assets question is specifically targeting cryptocurrency and blockchain-based assets. Your fractional Apple stock will be reported on a normal 1099-B as a standard security, while cryptocurrency has different reporting requirements, which is why the IRS has this separate question.

If you're unsure about TurboTax questions, I'd recommend trying FreeTaxUSA instead. Their questions are much clearer about digital assets vs regular investments. I switched last year and it was so much easier to understand!