I Didn’t Claim Any of My Cryptocurrency on My Taxes – Am I in Trouble?

On: December 2, 2023

Cryptocurrency has become a rising and popular form of digital currency within the United States. The IRS has started to take a stance on cryptocurrency and has put guidelines in place to ensure that anyone with cryptocurrency claims it on their taxes.

Since cryptocurrency is still relatively new, especially the taxation portion of it, taxpayers struggle to navigate the actual requirements set forth by the IRS and find themselves faced with penalties due to simply not understanding how to properly claim the digital coin.

Working with a tax professional is highly recommended, especially one that understands the tax requirements for cryptocurrency. An experienced IRS tax expert can help you claim your crypto income and avoid penalties the IRS can impose.

What Happens if I Don’t Report My Cryptocurrency?

There are two different scenarios here – error/mistake and purposeful.

If you intentionally or purposefully do not claim cryptocurrency on your taxes, the IRS is going to deem this to be fraud. If this were the case, the IRS can have serious consequences and penalties imposed upon you such as criminal prosecution and hundreds of thousands of dollars in fines.

If you forget to claim your cryptocurrency and it is not purposeful or you did not know you needed to claim your cryptocurrency, this is not considered fraud, but the IRS will still hold you responsible. You can expect the IRS to impose penalties and fines.

Is the IRS Looking Out for Cryptocurrency on Taxes?

Yes. Since cryptocurrency has risen in popularity, the IRS has started to crack down on compliance with cryptocurrency taxes. In fact, you have likely noticed the addition of new questions on the 1040 tax return form that ask taxpayers about cryptocurrency.

Do I Report All Cryptocurrency?

It is best to speak with a qualified and experienced tax professional to determine your exact filing requirements and to better understand what cryptocurrency needs to be claimed.

There are some instances where you may have crypto transactions that do not need to be claimed. Navigating the cryptocurrency world of taxes can be very overwhelming for taxpayers.

I Realized I Forgot to Report My Cryptocurrency Taxes – Now What?

If you find yourself in a situation where you forgot to report your cryptocurrency taxes, do not panic. You do have the opportunity to amend any of your tax returns to add in your crypto taxes. It is better to be a step ahead of the IRS instead of waiting for the IRS to contact you and audit you.

Even if you do amend your taxes, it is possible that the IRS may still impose a small penalty fee.

If you are unsure of how to claim your crypto taxes or amend your return to adjust for forgotten taxes, speak with a qualified tax professional right away.

Leading Tax Group Can Help with Your Cryptocurrency Taxes 

We get it – cryptocurrency taxes are confusing. With the addition of new laws and taxation on digital currency, it can be difficult to stay abreast of what needs to be done. Remaining in compliance with the IRS is crucial but mighty difficult, especially when you do not have any knowledge about what steps to take or how to properly claim taxes related to crypto.

The experts at Leading Tax Group are here to help you. We have many years of experience and have the knowledge about crypto taxes to ensure that your returns are filed properly. Our tax team is made up of a retired IRS tax attorney, a retired IRS auditor, and an experienced tax accountant who are all ready to represent you.

Don’t let your crypto scare you and let our team get your taxes filed the right way and keep you compliant with the IRS. Call Leading Tax Group today to schedule a consultation.