Credit Karma Tax, a tool launched by San Francisco–based personal finance firm Credit Karma back in 2016, offers a free tax filing service that can be used to report gains or losses from trading cryptocurrency.
Today, Credit Karma released a comparative report of capital crypto gains and losses on federal taxes between Jan. 28 and Feb. 22, 2019, compared to those who filed their 2017 federal income taxes with Credit Karma Tax between Jan. 29 and Feb. 23, 2018.
According to the report, the number of Credit Karma Tax filers who reported short-term capital crypto losses in the first month of the 2019 filing season soared by 521%.
A short-term gain or loss takes place when an investor sells an asset that was held within one year, while a long-term gain or loss envisions an asset that was held for more than one year, Credit Karma explains.
Crypto investors reporting long-term gains in the same period increased by 35 percent year over year, with early Credit Karma Tax filers reporting an average gain of $15,352 during the first month of the 2019 filing season.
The average reported short-term crypto losses amounted to $3,405, which represented a 322 percent increase in the average short-term loss from the first month of last year’s filing season.
In mid-January, Credit Karma released a survey showing that 53 percent of Americans planned to report their gains and losses for taxes from crypto, while 35 percent of respondents said that they sold their crypto at a loss and will not report on their tax returns.
Recently, Big Four auditing and professional services firm Ernst & Young launched a tool for accounting and preparing taxes on cryptocurrency holdings. The new tool dubbed EY Crypto-Asset Accounting and Tax is designed to facilitate accounting and tax calculations for digital currency transactions.