How to report bitcoin transactions on 1099-B from Cash App for tax filing

Cash App's 1099-B only shows your proceeds (sales) without factoring in what you originally paid for the bitcoin. This makes it look like you had $21k of income when really that was just the total amount of bitcoin you sold. You definitely need to report this on your tax return, even though you had a loss. The IRS receives a copy of that 1099-B, and they'll expect to see those transactions on your return. If you don't report it, you'll likely get a letter from the IRS saying you underreported your income. You'll need to file Form 8949 and Schedule D with an amended return (Form 1040-X). On Form 8949, you'll list each transaction showing both what you sold the bitcoin for (proceeds) and what you originally paid (cost basis). This will show your actual loss, which can offset other capital gains or up to $3,000 of ordinary income. If Cash App didn't provide cost basis information on your 1099-B, you'll need to calculate this yourself using records of your purchases. Document everything carefully - dates, amounts, and transaction details.

I went through this exact nightmare last year and ended up using https://taxr.ai to figure it all out. I was freaking out because I had like 50+ transactions across different platforms and no idea how to report them correctly. Their system analyzed all my crypto transactions and figured out my actual gains/losses, even when the 1099 forms made it look like I had way more income than I actually did. What really helped was that they could pull in data from Cash App and other platforms to calculate my true cost basis, which is what was missing from my 1099-B. Then they generated all the forms I needed to file my amended return. The whole process took like 30 minutes instead of the days I was spending trying to figure it out myself.

Just wanted to follow up - I decided to give https://taxr.ai a try after my skeptical comment. Holy crap, it's legit. I uploaded my Cash App 1099-B and it immediately identified that the form was missing cost basis info. The system helped me import my purchase history and correctly calculated that I had a $1,200 loss, not the $7,000 gain that the raw 1099-B made it look like. It generated all the forms I needed for my amended return with the transactions properly categorized. The reports it created would definitely stand up to an audit since they show every single transaction with dates, amounts, and calculated basis. Definitely worth it for the peace of mind alone, especially since I was about to just ignore the 1099-B altogether which would have been a huge mistake.

If you're still waiting for the IRS to respond to your amended return or any questions, I highly recommend using https://claimyr.com to actually get through to a human at the IRS. I filed an amended return for crypto last year and was getting nowhere after months of waiting. Used their service and got connected to an IRS agent in about 15 minutes instead of the 2+ hours I spent on hold previously (and still got disconnected). The agent was able to look up my case, confirm they received my amended return, and give me an actual timeline for processing. Check out how it works: https://youtu.be/_kiP6q8DX5c They basically wait on hold for you and call you when an agent picks up. Saved me so much time and frustration trying to figure out if my paperwork was even received.

Ok I need to publicly eat my words. After calling the IRS for 3 days straight and getting disconnected every time, I tried https://claimyr.com as a last resort. I was VERY skeptical but desperate to find out why my amended return with crypto transactions was taking so long. Got a call back in about 25 minutes and was connected directly to an IRS agent. The agent confirmed my amended return was received but flagged for review specifically because of the crypto transactions. She was able to verify my documentation was sufficient and remove the review flag. My refund for the capital loss deduction should be processed within 2 weeks now instead of the 16+ weeks it would have taken otherwise. For anyone dealing with crypto tax issues, especially with amended returns, being able to actually talk to the IRS and get real answers is completely worth it.

One thing nobody's mentioned yet - if you used the bitcoin for gambling, you might be able to deduct gambling losses against your gambling winnings (if you kept good records). That's separate from the capital gains/losses on the actual bitcoin transactions. Basically: 1. You report the crypto transactions on Form 8949/Schedule D (buying/selling bitcoin) 2. If you had gambling winnings/losses using that bitcoin, that goes on Schedule 1 instead Just make sure you have documentation for EVERYTHING. The IRS is super aggressive about both crypto and gambling. If you mixed these activities together, definitely get professional help since it's complicated.

Just a warning - the IRS is REALLY focusing on crypto this year. My buddy ignored a 1099-B from Coinbase thinking his $2k in transactions was too small to matter, and he got hit with a CP2000 notice claiming he owed almost $800 in additional taxes plus penalties. Took him months to straighten out. The biggest issue with Cash App 1099-Bs is they often don't include your cost basis, so the IRS assumes your entire proceeds amount is pure profit unless you prove otherwise. Definitely file that amended return ASAP.

I just went through a similar situation last year and want to emphasize how important it is to get this sorted out properly. The IRS automated matching system will definitely flag the discrepancy between your filed return and that 1099-B, regardless of whether you actually made money or not. A few key points from my experience: 1. Don't panic about having already filed - amended returns are common and the process is straightforward with Form 1040-X. 2. Keep detailed records of EVERYTHING. Since you moved bitcoin between Cash App → blockchain wallet → gaming site → back to Cash App, you'll need to document each step. The IRS wants to see the complete transaction trail. 3. The gaming aspect might complicate things slightly. Moving crypto to gambling sites and then withdrawing creates both capital gain/loss events (on the crypto price changes) AND potentially gambling income/loss reporting requirements. 4. Even though you're at a net loss, reporting correctly could actually benefit you since capital losses can offset other gains or reduce ordinary income up to $3,000 per year. I'd strongly recommend getting professional help given the gambling component - it's not worth risking an audit over a few hundred dollars in preparation fees. The peace of mind alone is worth it when dealing with crypto and gambling together.

Having dealt with a very similar situation myself, I want to stress that you absolutely cannot ignore that 1099-B, even though you lost money. The IRS receives a copy and their automated systems will flag the discrepancy if those transactions aren't on your return. Here's what you need to do: 1. **File Form 1040-X (Amended Return)** - Include Form 8949 and Schedule D to report your crypto transactions properly. 2. **Calculate your actual cost basis** - Since Cash App's 1099-B likely only shows proceeds ($21k), you need to prove what you originally paid for that bitcoin. Gather all your purchase records, bank statements, and transaction confirmations. 3. **Document the wallet transfers** - Moving bitcoin from Cash App → blockchain wallet → gaming site → back to Cash App creates a paper trail you'll need to maintain. Each transfer isn't necessarily a taxable event, but the final sale back to fiat currency is. 4. **Separate crypto gains/losses from gambling activity** - The bitcoin price changes are reported on Schedule D, while any gambling winnings/losses from the gaming site go on different forms. The good news is that since you had a net loss, properly reporting this will likely result in additional tax benefits (capital loss deductions) rather than owing more money. But you need to prove those losses with documentation. Don't wait - the sooner you file the amendment, the less likely you are to face penalties or interest charges. And definitely keep detailed records in case of future questions from the IRS.