I forgot to report crypto on my prior year returns. What should I do?
The IRS is increasingly focusing on unreported crypto transactions. You should amend your prior returns to include the omitted crypto income. This is essential to avoid potential penalties.
If I traded one crypto for another but didn't convert back to fiat, do I need to report it?
Yes, all crypto transactions, including trades between different cryptocurrencies, must be reported. Use Form 8949 to document these transactions.
How do I generate Form 8949?
Many platforms, such as CoinTracker.io and CoinTracking.info, can generate Form 8949 by linking to your exchanges. There are numerous similar tools available for this purpose.
What if my exchange was shut down or data is no longer available?
If exchange data is unavailable, you can use estimates. If you’re unsure about how to estimate correctly, book a consultation with us for guidance.
What if my exchange was shut down or data is no longer available?
If exchange data is unavailable, you can use estimates. If you’re unsure about how to estimate correctly, book a consultation with us for guidance.
I have multiple types of crypto income (e.g., interest, trading). Should I report them separately?
Yes, different types of crypto income may have distinct reporting requirements. Contact us to analyze your activity and determine the necessary forms and schedules.
I was a victim of crypto fraud. Can I claim this as a deduction?
Yes, losses from financial fraud can be deductible. We can assist you in claiming this deduction.
I have significant potential crypto gains. Are there strategies to minimize tax liability or can I relocate to a state with lower taxes?
There are several strategies to consider based on your specific situation. We can explore options to optimize your tax position and discuss relocation strategies if applicable.
My Form 8949’s cost basis looks incorrect. What should I do?
Answer: Contact us to address this common issue. We can help you correct discrepancies in your cost basis.
I had minimal trading activity. Do I still need to report it even if it’s below the 1099 reporting threshold?
Yes, the IRS requires reporting of all crypto transactions, regardless of amount. Even if your activity is below the 1099 threshold, you must report it.
Do wash sale rules apply to crypto?
No, wash sale rules do not apply to cryptocurrencies. You can use losses from crypto sales to offset other capital gains.
How are staking rewards from DeFi for?
Staking rewards are generally treated as interest income, depending on the underlying activity.
Can I take a tax deduction if I am a victim of crypto fraud/scam?
Yes, there are ways to deduct losses from crypto fraud. Each method has its own implications, so contact us for detailed advice.
How are NFTs taxed?
Taxation of NFTs depends on whether you’re creating and selling them or trading them. Creating and selling NFTs is considered ordinary income, while trading NFTs involves reporting gains and losses on Form 8949.
- My exchange is asking for tax money before allowing withdrawals. Is this normal?
- No, this is not normal and could indicate fraud. If you encounter this situation, contact us for guidance on how to handle potential crypto fraud.
- What are the tax implications if my exchange is frozen?
- Major exchanges like FTX, BlockFi, Voyager Digital, Three Arrows Capital (3AC), and Celsius Network filed for bankruptcy in 2022. Holding assets in these exchanges may provide potential tax relief.