13 Jan I Didn’t Report My Crypto Trades On Prior Year’s Tax Return?
What Do I Do? I Didn’t Report My Crypto Trades On Prior Year’s Tax Return?
In 2014 the IRS determined that cryptocurrency was property for tax purposes. There are well-established rules for how to treat property in place. However, many people aren’t disclosing their cryptocurrency transactions. If you were buying and selling cryptocurrency at any point in the past few years, you needed to report these transactions on your annual tax return.
The IRS has ramped up its efforts to go after those that did not correctly report their cryptocurrency-trading on prior years’ tax returns.
Back in the summer of 2019, the IRS mailed some 10,000 letters to crypto account owners to educate crypto account holders about the rules. And tell taxpayers to review their tax reporting for crypto transactions to be sure they reported income correctly.
Forbes published an article on July 31, 2019, Watch Out Cryptocurrency Owners, The IRS Is On The Hunt. The article explained the letters traders received from the IRS. It stated that “The IRS might know there is unreported income based on tax information obtained through enforcement actions, which include the summons against U.S. Coinbase customers. You received the letter because you didn’t file a tax return, which should have included virtual currency transactions. Alternatively, you filed a return but did not report virtual currency transactions. You must reply to this tax notice by submitting a correct late tax return or an amended return.” They further went on to state that “Letter 6173 is a severe tax notice, and you should not dig yourself into a bigger hole with an incorrect reply. In some cases, perjury could be a felony. The letter states, “If we don’t hear from you by the “respond by” date, we may refer your tax account for examination.”
The IRS advised, “Taxpayers who do not properly report the income tax consequences of virtual currency transactions are, when appropriate, liable for tax, penalties, and interest. In some cases, taxpayers could be subject to criminal prosecution.”
On October 6, the IRS released a ruling with guidance for cryptocurrency holders. They also sent out correspondences advising virtual currency owners to pay their back taxes. If you received a letter from the IRS, you should consult with me immediately.
I am an Advanced Crypto Tax Expert (ACT-E) and specially trained to help taxpayers resolve any outstanding issue to your incorrectly filed tax returns.
I didn’t report my crypto trades on my prior year’s tax return? What do I do?
Did you know that the IRS can go back up to three years to prosecute cases of tax evasion, and in cases where they find significant errors, they can go back up to six years or more? Many crypto investors and traders are concerned about getting audited and having a future tax liability that they can’t afford. The solution to this potential problem is to be proactive and amend your previous years’ return.
What should you do if you already filed your tax return and didn’t report your cryptocurrency gains on that return? Amend your tax return for whichever year(s) you didn’t report your crypto trades. You have three years from the date that you filed your return to file an amended return. The IRS is more forgiving to those who make a good-faith effort to pay their taxes.
To accurately calculate how much money you owe in capital gains, you have to know what the Fair Market Value of the cryptocurrency was at the time of the trade. For traders who have executed hundreds, if not thousands of trades over the years, this can be a daunting task.
As an ACT-E, I have the specific expertise to help taxpayers who didn’t report all of their crypto gains get back on track. We can amend both federal and state income tax returns to report missing crypto gains or other income.
However, the past three years of tax returns should be amended, but depending on the exact circumstances, a more extended period might be necessary. I can help you assess your current situation and determine how many years you need to amend. Call me today at 877.355.8010 or contact us today, http://bit.ly/2Hh7cEl.