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How to File Crypto Taxes (Step-by-Step Guide)

If you’re searching for how to file crypto taxes or how to report crypto taxes, the process is usually straightforward in theory: track every transaction, calculate cost basis, compute gains/losses, and generate the reports your tax filing needs. In practice, the hardest part is getting clean, accurate data—especially if you used multiple wallets, exchanges, DeFi, or NFTs.

How this works (plain English)

Most crypto tax offers are simple: you open a new account, complete any required verification, and then qualify by meeting the funding or activity requirements shown on the offer page. The key is to understand what counts (deposit type, minimum amount, timing) and what doesn’t (transfer types that don’t qualify, partial requirements, or wrong market/products).

If you’re new, focus on the “minimum steps” first: create the account, verify, fund with the correct method, and only then explore extra perks like task centers, rebates, or tiered rewards.

Common mistakes people make

  • Clicking the wrong link: bonuses often require using a specific entry link or referral path.
  • Missing a deadline: some promos require funding within a set time window after signup.
  • Assuming all deposits qualify: certain deposit types or internal transfers may not count.
  • Overtrading to “earn it”: chasing rewards with unnecessary trades can cost more in fees.

What most people misunderstand

A “bonus” is not free money if you ignore the fine print. The real question is: what is the net benefit after fees, spreads, and your plan? If you’re a long‑term investor, you usually want the cleanest path (fund, buy, hold). If you’re an active trader, you care more about fee tiers, liquidity, and platform reliability than a one‑time promo.

Not a fit if…

  • You’re planning to trade frequently but don’t understand fees/spreads/liquidation risk (for futures).
  • You’re only here for a bonus but can’t meet the minimum funding/verification requirements.
  • You need instant withdrawals on day 1 (many platforms have hold periods for new accounts).
  • You prefer to avoid custodial platforms entirely and want self‑custody only.
Get Help from Count On Sheep Crypto Tax Hub
Fast reality check: If you only used one exchange and made a few trades, a basic crypto tax tool may be enough. If you used multiple wallets, DeFi, NFTs, bridges, or have “unknown cost basis” issues, you may want a specialist to reconcile everything.

Step 1: Gather Your Crypto Tax Records

Your tax reporting is only as good as your records. Start by listing:

Step 2: Identify Taxable vs Non-Taxable Events

In the simplest terms, many jurisdictions treat crypto like property. That means:

Common mistake: Transfers between your own wallets get imported as “sales” or “income” if they aren’t matched correctly. That’s one of the biggest reasons tax reports look wrong.

Step 3: Calculate Cost Basis (The Core Problem)

Cost basis is basically: what you paid for the asset (plus adjustments). If cost basis is missing, your tax report can show inflated gains. Cost basis problems happen when:

If you see “unknown cost basis,” your numbers are not reliable until reconciled.

Step 4: Handle DeFi, Staking, and NFTs Correctly

DeFi and NFTs introduce complexity because the transactions often don’t look like simple buys/sells. Examples of complexity:

Why people hire specialists: Many tax tools import DeFi/NFT activity but misclassify it without human review. A specialist reconciles and reclassifies events to produce CPA-ready reporting.

Step 5: Generate Reports for Filing

Ultimately, you need clean outputs that your CPA (or your own filing) can use. This generally includes:

When to Use Count On Sheep

If your portfolio is simple, DIY software might work. If your portfolio is complex, Count On Sheep is designed for:

If you want the “is it legit / reviews” breakdown first: Count On Sheep Reviews.

Get CPA-Ready Crypto Tax Help Best Crypto Tax Software

FAQ

Do I need to report every crypto transaction?

Generally yes—your gains, losses, and income are derived from transaction history.

What if I used multiple wallets and exchanges?

That’s where cost basis and transfer matching issues usually happen. Specialist reconciliation can help.

What if my report shows huge gains that don’t feel right?

That’s often caused by missing cost basis or misclassified transfers. Don’t file until it’s reconciled.

Affiliate Disclosure: This page may contain affiliate links. If you use them, I may earn a commission at no extra cost to you.
Not financial, tax, or legal advice. Educational purposes only.