In addition to our partnership with TaxBit, this year Cash App is helping you calculate your gains and losses associated with your bitcoin transactions on Cash App. Cash App has prepared a Basis and Gain document (sometimes referred to as a FIFO Net Gain Summary) on your Cash App account to assist you with reporting your bitcoin transactions on your US individual income tax returns. Cash App does not provide tax advice. This article is a summary of certain tax rules, which may change. This article should not be considered as tax advice and you are urged to consult your own tax advisor regarding your own tax circumstances.
A Basis and Gain document outlines the following:
- Short term proceeds
- Short term gain or loss
- Long term proceeds
- Long term gain or loss
Understanding Gains and Cost-Basis
Cash App users who are subject to income tax in the United States will generally recognize gain or loss if they sell bitcoin on Cash App. Such gain or loss equals the difference between the sales price and the Cash App user’s tax basis in the bitcoin that was sold. The sales price generally equals the amount received on Cash App for the bitcoin less any Cash App fees. The tax basis, also known as cost-basis, generally equals the amount paid for the bitcoin plus any Cash App fees. Gains or losses are only capital gains or losses if the bitcoin is a “capital asset” in your hands and you should consult your own tax advisor regarding whether your gains or losses are capital gains or losses. Capital gain or loss recognized on bitcoin sales will generally be long-term capital gain or loss if the bitcoin was held for more than one year (beginning the day after purchase), or short-term capital gain or loss if the bitcoin was held for one year or less, at the time of the sale.
Calculating Bitcoin Gains/Losses with FIFO
Cash App’s Basis and Gain document uses the FIFO (First In, First Out) accounting method to calculate your gains and losses for US income tax purposes. This means your earliest acquired bitcoin is deemed to have been sold for purposes of calculating your gains and losses for US income tax purposes. The Basis and Gain document calculates your gains and losses using the FIFO accounting method since it is a permissible accounting method for federal income tax purposes. However, if you prefer to use a different accounting method, Cash App customers can use TaxBit at no cost. You may also calculate your gains and losses for US income tax purposes by downloading your Transaction CSV. You should be aware that other accounting methods of calculating the gain or loss of your Bitcoin sales on Cash App exist that may be more advantageous for you. Such other methods may require certain record keeping of the lots of Bitcoin deemed sold at or prior to the time of your sale of such Bitcoin. In addition, the FIFO accounting method calculations provided by Cash App may not be accurate based on your prior year tax reporting of your sales of bitcoin, of which Cash App has no knowledge.
Accessing Your Basis and Gain Document
The Basis and Gain document will be provided to customers who have bought, sold, got paid in bitcoin, used bitcoin boosts, or bitcoin round ups. The Basis and Gain document won't be available to customers who have sent/received bitcoin on the Bitcoin Network, Lightning Network, or have sent P2P bitcoin payments.
To access your Basis and Gain CSV:
- Tap the profile icon
- Select Documents
- Select Bitcoin
- Tap Basis and Gain to download
Where Can I Learn More?
For help importing your Cash App Transactions CSV into TaxBit, filing with Cash App Taxes, and for more information about the 8949 Form, check out TaxBit’s help center.
- Cash App CSV Guide
- Cash App Taxes Import (Mobile)
- Filing with Cash App Taxes
- All About The 8949 Form
Where Can I Get Help With Using Cash App Taxes?
For more information on Cash App Taxes, visit the Cash App Taxes Support Center.
Cash App does not provide tax advice. If you have questions about your particular tax situation you should consult a tax advisor.
The tax treatment of bitcoin transactions is complex. It is your responsibility to determine what taxes, if any, arise from your transactions involving bitcoin on Cash App. You acknowledge and agree you are solely responsible for calculating, determining, reporting and paying any applicable taxes arising from your bitcoin transactions on Cash App, including the determination of whether any gains or losses from those transactions are capital gains or losses reportable on your IRS Form 8949. Cash App does not provide tax or legal advice. If you have questions about your particular tax or legal situation you should consult a tax advisor or attorney.