If you trade in stocks or crypto, or even get paid in crypto, you could be taxed. Lisa Greene-Lewis offers expert advice on what to watch for if you sell investments, get paid in crypto and if you have investment losses.
Read the transcript below or watch the video above.
Video transcript:
Tracy Byrnes: Lots of people getting involved in the stock market these days and the cryptocurrency market. So what do you need to know? And how do you save money? Lisa Greene-Lewis, TurboTax expert and CPA, is here with us right now. Look, the world is open now. Lots of people are trading. And I don't think enough people understand the tax implications of it. So where do we begin with this?
Lisa Greene-Lewis: Well, first thing you should [know] with crypto, it's treated just like stock. And I always think about how you use it is how it's going to be taxed. So if you're holding it as an investment, and you sell it, you're going to have capital gains and losses.
Now, people are paying people in crypto. So if you're being paid in it, it's going to be like a wage, or you could be paid as a contractor. So that's going to show up on -- if you're paid as a contractor, what you're paid in crypto, it's going to show up on a 1099. And then with that, if you're paid in it, you're also going to have another transaction when you sell the crypto. And then it's going to be looked at as an investment.
Tracy Byrnes: Right. And so that brings us then back to the regular investment rules of gains and losses with that extra $3,000. So maybe we should remind people of that.
Lisa Greene-Lewis: Yes, especially, as we're coming on the end of the year, you want to think about if you have any losing stock or crypto, as well, you can offset those losses against your gains. And then you can offset up to $3,000 against your ordinary income like wages. And then if you have losses beyond that, that can carry forward to the next year.
So don't forget that especially, if you had carry forward losses from previous years, you don't want to forget to include that on your tax return because that can also lower your taxes.
Tracy Byrnes: I will say, that that's one of the perks to using TurboTax. The system remembers and will carry it forward for you. We had talked in an earlier video about uploading all our trades. Let's talk about that now too. Because if people are day trading, so to speak, there can be hundreds of them.
Lisa Greene-Lewis: Right. And you don't want to have to manually enter all of those transactions. So TurboTax allows you to automatically import up to 10,000 stock transactions and 20,000 crypto transactions at once.
Tracy Byrnes: It's a huge help. So people should start to gather their documents. And at this point in the year too, it's also probably a great exercise to look at your portfolio and see what you like and what you may want to offload to create some losses before year end.
Lisa Greene-Lewis: Yeah. If you have anything that is just not performing well, and it doesn't look like it's going to increase, you might want to -- if you do sell it, and you have a loss, remember, you can offset that.
Tracy Byrnes: And if the, R word, recession happens, there could be a lot of opportunity to create losses when you didn't even know you had them. Lisa Greene-Lewis, TurboTax expert and CPA, thank you for sharing all that.
Lisa Greene-Lewis: Thank you for having me.
Editor's Note: The content was reviewed for tax accuracy by a TurboTax CPA expert for the 2022 tax year.
