Crypto Tax: IRS Catching Investors Who Don’t Pay Taxes

Those who invest in Cryptocurrency may not be aware that there is a tax on Crypto, just like everything else in the world. Cryptocurrency investors have mostly flown under the radar as far as taxes are concerned. Now those days are coming to an end, and many of those with digital wallets are scrambling to understand what they owe and how their investments may impact their finances.

The IRS is already on top of discovering the identities of those who hold substantial amounts of cryptocurrency, and it is only a matter of time until the tax agency broadens its scope. Just as with overseas bank accounts, the days of free riding in the crypto market are quickly coming to an end.

When the veil of secrecy got pierced for holders of Swiss bank accounts, people all over the world were shocked — and suddenly a lot poorer. Crypto fans have primarily relied on the supposed anonymity of their investments to protect themselves. However, recent events have shown that Bitcoin and other cryptocurrencies are not entirely as anonymous as advertised. It may be time to visit your enrolled agent, because it is certainly time to get out ahead of the situation.

Here are some tax tips for cryptocurrency investors.

Do Not Assume Your Account is Too Small

If you only have a few hundred dollars in the cryptocurrency market, you may assume that your account is too small to get the attention of the IRS. However, that is not necessarily the case. They are going to rapidly get better at sorting out the records of cryptocurrency exchanges. Pretty soon, they will likely expand their reach beyond the most significant players in the marketplace.

Before you know it, more and more cryptocurrency investors will become ensnared in the net of the IRS.

Know that All Cryptocurrencies Will Be Impacted Eventually

Bitcoin is the first and – by far – the most significant crypto tax target. The IRS will start poking around in other forms of virtual payment. Some cryptocurrencies may carry considerably detrimental IRS consequences. For example, there are forms of payment associated with drug purchases and other transactions on the dark web. Even if you are not doing anything wrong, your holdings in those altcoins could get the attention of the IRS and eventually generate a big tax bill.

Keep Careful Records

Keeping extensive and accurate records will be essential going forward. Also, you might want to go back and look at your past purchases and sales. Every transaction, including purchases using cryptocurrency as payment, could potentially be a taxable event, so good recordkeeping is vital.

The tax man is coming eventually, and the best thing you can do is prepare now. Waiting until the IRS catches you could mean big penalties and additional interest. The best strategy is to find a professional, like Jeffrey Schneider, EA, CTRS, that has the expertise and licensing to practice throughout the United States. He can resolve any issues involving your cryptocurrencies.

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Jeffrey Schneider, EA, CTRS, NTPI Fellow has the knowledge and expertise to help you reach a favorable outcome with the IRS. He is the head honcho at SFS Tax Problem Solutions as well as an Enrolled Agent and a Certified Tax Resolution Specialist.
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Now What? I Got A Tax Notice From The IRS. Help! Defining and deconstructing the scary and confusing letters that land in your mailbox. Jeff defines and deconstructs the scary and confusing letters in a fashion that mixes attention to detail with humor and an intricate clarification of what is what in the world of the IRS.

The book is available in paperback and ebook on https://Amazon.com
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