People who engage in cryptocurrency transactions in San Diego, California may not be reporting the income from these cryptocurrency transactions (“crypto income”) on their tax returns because they want to save money by not paying tax liability on their crypto income. However, in fact, unreported crypto income in San Diego may cause people to spend more money because they will be subject to additional liabilities.
First, unreported crypto income can result in additional interest liability.The Internal Revenue Service (“IRS”) currently charges an interest rate of 3% on the tax liability from unreported crypto income. Interest liability will accrue from the due date of your tax return until your date of payment. Interest is compounded daily.
Second, unreported crypto income can result in additional penalty liability. The IRS charges a failure-to-pay penalty equal to 1/2% of the tax liability from unreported crypto income for each month, or part of a month, up a maximum of 25%. Failure-to-pay penalty liability also will accrue from the due date of your tax return until your date of payment.
You also may be subject to other civil penalties for unreported crypto income, including the negligence penalty and the substantial understatement of tax liability penalty.
The IRS can take other action against you if you have unreported crypto income.
You may face tax audits, bank levies, wage garnishments, and seizures of assets, because of the unreported crypto income.
You may face criminal prosecution and possible incarceration because of unreported crypto income.
San Diego taxpayers should not expect that the IRS will not uncover your unreported crypto income, as the IRS is focusing more attention on cryptocurrency transactions.
On year 2020 Form 1040 tax returns, taxpayers are required to answer the question, “At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?”.
In addition, the IRS has commenced “Operation Hidden Treasure”. “Operation Hidden Treasure” consists of a joint team of IRS criminal investigators and fraud enforcement personnel to find cases of unreported crypto income.
According to the IRS, cryptocurrency is a type of property, similar to stock. Thus, if you make a profit from the purchase and sale of cryptocurrency, you must report such profit as crypto income on your tax return.
Taxable crypto income also can result when you receive cryptocurrency as payment for goods or services. When received for goods, the cryptocurrency is taxable crypto income to the extent it is more than your tax basis in the goods. When received for services (such as for performing blockchain ledger work in a “mining” transaction or otherwise), the cryptocurrency is fully taxable crypto income as compensation.
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Taxable crypto income also can result when you receive cryptocurrency from a company for its marketing or promotional purposes in an “airdrop” transaction.
If you have unreported crypto income, you need to have someone who is familiar with and understands unreported crypto income issues help you to resolve your unreported crypto income problem. You need help from Leading Tax Group.
Leading Tax Group has the two key qualities that you should want in seeking representation in an unreported crypto income case – wide knowledge and understanding of how cryptocurrency works and significant experience in favorably handling other unreported income matters for San Diego taxpayers.
With these two qualities, Leading Tax Group can successfully help San Diego taxpayers in their unreported crypto income cases.
Leading Tax Group has an office in San Diego, at 11622 El Camino Real, 1st Floor.
If you want to avoid additional liabilities from unreported crypto income, and live in the San Diego area, you need the aggressive and experienced tax representation of Leading Tax Group. Contact Leading Tax Group now!
read more Contact UsHeadquartered in Encino, California with multiple local branch offices in your backyard to serve you at your convenience. Leading Tax Group can schedule a face to face consultation to represent your case with the IRS, FTB, EDD, as well as CDTFA Audits.
Call our top-rated, experienced team today. We are experts in all San Diego laws relating to Bitcoin policy and can help you make the right decisions for yourself and your business.
No matter how far along you are in your journey toward capitalizing on Bitcoin, you need the proper representation to make sure you aren’t losing valuable dollars to the IRS.
Get in touch with our expert Bitcoin experts here in San Diego today and see how we can help you protect your assets and keep the IRS out of your business.
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