How to Report Your XRP Taxes | Tax Forms (2024)

FAQs

How to Report Your XRP Taxes | Tax Forms? ›

Reporting your crypto activity requires using Form 1040 Schedule D as your crypto tax form to reconcile your capital gains and losses and Form 8949 if necessary. You report your total capital gains or losses on your Form 1040, line 7.

US taxpayers should report crypto capital gains and losses on Form 8949 and Schedule D and any ordinary income from crypto on Form 1040 Schedule 1 or Schedule C for self-employment. Proper documentation is essential to comply with IRS regulations.

How are XRP transactions taxed? The exact tax implications on XRP transactions depend on which country you live in and the type of transactions you have made. However, in most countries, you must generally pay capital gains tax on all XRP transactions except transfers between your own wallets.

Provide the details of your crypto gain/loss on Form 8949

On Schedule D, you'll subtract your cost basis from the total proceeds to arrive at your total capital gain or loss. From there, Schedule D will determine how much tax you owe or what kind of deduction you receive.

US taxpayers must report any profits or losses from trading cryptocurrency and any income earned from activities like mining or staking on tax return forms, such as Form 1040 or 8949. Not reporting can result in fines and penalties as high as $100,000 or more severe consequences, including up to five years in prison.

The general rule to go by with crypto investing is, you usually report it when you dispose of it (sell it). Your crypto falls under the capital gains tax rules, which apply when a disposal event occurs. These disposal events are generally when you sell it or trade it for another currency.

Cryptocurrencies are traceable, with transactions recorded on a public ledger accessible to the IRS. The IRS uses advanced methods to track crypto transactions and enforce tax compliance. Centralized exchanges provide user data to the IRS.

XRP is a cryptocurrency and native token of XRP Ledger, an open-source blockchain. The cryptocurrency and blockchain are designed to enhance global financial transfers and the exchange of several currencies. Investors also use it to store value and profit from price fluctuations.

Multiple options exist for selling XRP in exchange for USD. A direct route includes trading XRP directly for USD on an XRP-compatible exchange. A less straightforward option might be swapping XRP for a different crypto asset and then transferring that crypto asset to a compatible exchange to sell it for USD.

Some cryptocurrency exchanges do not report user transactions to the IRS, including: Decentralized crypto exchanges (DEXs) like Uniswap and SushiSwap.

Can you write off worthless crypto? ›

Writing Off Worthless Crypto

If there is still some value to the coin, even a tiny bit, you can sell your holdings and report the loss on your taxes. But if the coin has gone completely to zero and is no longer traded on any exchange, you're out of luck.

US taxpayers do not have to pay taxes simply for holding crypto. Taxes only apply when you earn, sell, or exchange crypto.

While Coinbase One subscribers can get a pre-filled Form 8949, this form only includes transactions from Coinbase — not your other crypto wallets and exchanges. All of your disposals of cryptocurrency and other capital assets should be reported on Form 8949.

There is no way to legally avoid taxes when cashing out cryptocurrency. However, strategies like tax-loss harvesting can help you reduce your tax bill legally. Converting crypto to fiat currency is subject to capital gains tax. However, simply moving cryptocurrency from one wallet to another is considered non-taxable.

Any cryptocurrency capital gains, capital losses, and taxable income need to be reported on your tax return. You can report your capital gains and losses on Form 8949 and your income on Form 1040 Schedule 1 or Schedule C depending on your situation.

The IRS has started auditing taxpayers specifically to evaluate their crypto trades. This is nothing to worry about and you are expected to disclose any addresses or wallets you own or control and any exchange accounts you have.

You must report income, gain, or loss from all taxable transactions involving virtual currency on your Federal income tax return for the taxable year of the transaction, regardless of the amount or whether you receive a payee statement or information return.

The IRS currently requires crypto users to report many digital asset activities on their tax returns, regardless of whether the transactions resulted in a gain. Users are required to make that calculation themselves, and the platforms on which digital assets trade do not give the IRS that information.

Currently, most major exchanges issue 1099 forms to customers. Starting in the 2025 tax year, all crypto exchanges operating in the United States will be required to issue Form 1099-DA to report capital gains and losses from crypto. Where can I get a crypto 1099? 1099 forms are typically issued by your crypto exchange.