What if I can’t file my crypto taxes in time? How do extensions work
The US tax deadline is rapidly approaching, and many people are concerned that they will not be able to get their crypto taxes in order before then. But don’t fret, you can file for an extension quite easily. Here are the scenarios where you may want more time:
I need more time to get my paperwork together
Depending on your income and investment situation, taxes can be quite complex, and you may not be able to get all the documents and/or make all the calculations you need in time. You also don’t want to rush and make a mistake.
You know you owe money and don’t feel like you can pay the tax bill by April 15th
For many crypto traders, 2018 was a rough year of no capital gains. But what if you were one of the lucky ones with gains, and you owe taxes but aren’t liquid enough to pay the bill? You may be tempted to not file to buy yourself time, but that isn't the way to go.
If you avoid filing your taxes, you will incur a 5% penalty on the taxes owed. That 5% penalty is immediate. In addition to this, you will have to pay interest. If you file for an extension, you would only have to pay interest, which is currently 0.5% per month for the first 6 months.
Let’s look at a scenario where you owe the IRS $10,000 but cannot pay:
Scenario #1: Don’t file an extension. You would owe 5% immediately plus the 0.5% monthly interest. If you pay on October 15th, your tax bill would be $10,800 ($500 immediate penalty plus the 0.5% interest for 6 months).
Scenario #2: File an extension. Since you only owe the monthly interest, your tax bill will be $10,300.
You save $500 simply by filing an extension.
Our team at TokenTax can file an extension for you for free with any package. Reach out to us now.
TokenTax does the work so you don’t have to.
Exit hijack mode
Show admin panel