Purposefully not reporting or misreporting your Crypto related income is Tax Evasion at a minimum, and Tax Fraud at worst.
I follow many crypto podcasts, forums and newsletters and read many crypto related articles.
I’ve been seeing a disturbing number of postings suggesting that you should not report your cryptocurrency trades on your income tax returns as they believe the odds of the IRS discovering your lack of reporting is extremely low.
This is terrible advice and should be ignored. The U.S. and other governments are extremely interested in cryptocurrencies. To believe they will not have crypto related tax evasion as a high priority is to not be in reality. I believe they will want to make quick examples of anyone caught evading taxes.
If you are thinking of playing the odds and purposefully not reporting or misreporting your cryptocurrency trades on your income tax returns, please reconsider. The odds are not in your favor.
You should assume:
- That the IRS will acquire all of your crypto history from ALL sources for all years.
- They will calculate your annual gross proceeds from crypto trades/exchanges and cash purchases/sales of cryptocurrency.
- They WILL EASILY verify that you have reported those gross proceeds on your income tax returns for those years.
- If you have not reported your crypto income, look for certified IRS letters in your mailbox shortly after.
If you are on the fence about reporting your crypto trades accurately, I urge you to contact me so we can discuss this further.
As April 15th is quickly approaching, one strategy would be to calculate your estimated tax due, and pay that with an extension. That gives us plenty of time to accurately evaluate your situation, and to file an accurate return by October 15th.
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Chris Whalen, CPA
(732) 673-0510
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www.chriswhalencpa.com
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