Despite the pandemic, investors have potentially made a lot of gains through cryptocurrency transactions, the stock market, and more.
So what do people need to think about when it comes time to file taxes for the 2021 tax year?
In the video above, Lisa Greene-Lewis, a certified public account (CPA) and TurboTax expert, gives some advice to new investors.
Advice for New Investors:Taxable transactions. You don’t have a taxable event until you sell your stock or crypto.How you’re taxed. You’re taxed based on how long you hold your stocks or crypto before you sell them. If you hold your stock or crypto for over a year, then you have the benefit of long-term capital gains.Losses. If you had any losing stock or crypto losses when you sold, you can offset your gains with those losses. And your losses can carry over to your ordinary income like W-2 income or self-employment income, up to $3,000.Quotes | Cryptocurrency and Stock Advice for New InvestorsFull Video Transcript Below:Tracy Byrnes: The stock market, despite the pandemic, has kind of been on fire. So people have potentially a lot of gains. Crypto’s been moving. I mean, you need, you know, Dramamine to follow it, but it has been moving. So there might be capital gains there too. So what do people need to be thinking about?
Lisa Greene-Lewis: Yes, so I know there’s a lot of new investors out there. The first thing they need to think about, I mean, I often hear the question people don’t even know when their transactions are taxable. So they need to think about, you don’t have a taxable event until you sell your stock or crypto. Also, depending on how long you hold your stocks before you sell them, that’s also how you’re taxed. If you hold your stock or crypto for over a year, then you have the benefit of those long-term capital gains, which are less, you know, you’re taxed less. And then also remember if you had any losing stock or any crypto losses when you sold, which a lot of people are not having. But if you did, you can offset your gains with those losses. And then your losses can carry over to your ordinary income like, you know, your W-2 income or self-employment income, and that’s up to $3,000.
Tracy Byrnes: So I’m getting my investments together, and crypto, in particular, starts to get so confusing because people are trading in and out of it. How do I even keep track of this with my tax return?
Lisa Greene-Lewis: So we have TurboTax Premier, and it really gets after one of the biggest pay points that investors have. We are able to directly import your stop transactions and your crypto transactions from these financial institutions and crypto platforms. So we can directly import up to 4,000 cryptocurrency transactions and 10,000 stock transactions at once.
Tracy Byrnes: Lisa Greene-Lewis, CPA and TurboTax expert, thank you so much for clearing this up.
Editor’s note: Video produced by TheStreet’s Zach Faulds