Forgot to Claim Crypto Taxes? Here's What to Do
People who forget to claim taxes on capital gains from crypto: Beware the consequences
Cryptocurrencies have become increasingly popular in recent years, and many people are now investing in them in the hope of making a profit. However, it is important to remember that cryptocurrencies are subject to taxation, and capital gains on crypto must be reported to the IRS. Failure to do so can result in penalties and interest, and even criminal charges in some cases.
There are a number of reasons why people might forget to claim taxes on their crypto capital gains. One common reason is that crypto is a relatively new asset class, and many people are not familiar with the tax implications of investing in it. Another reason is that crypto transactions can be complex and difficult to track, especially for people who are new to investing.
Whatever the reason, forgetting to claim taxes on crypto capital gains can have serious consequences. The IRS is increasingly focused on crypto taxation, and they have the tools and resources to track down taxpayers who are failing to comply. If you are caught underreporting your crypto income, you could face penalties of up to 75% of the tax owed, plus interest. In severe cases, you could even be charged with tax evasion, which is a criminal offense.
If you have forgotten to claim taxes on your crypto capital gains, the best thing to do is to file an amended tax return as soon as possible. The IRS is more lenient with taxpayers who make a good-faith effort to correct their mistakes than those who try to evade taxes altogether.
Here are some tips to help you avoid forgetting to claim taxes on your crypto capital gains:
Keep good records of all your crypto transactions. This includes the date, time, and amount of each transaction, as well as the type of cryptocurrency involved.
Use a crypto tax software program to track your gains and losses. These programs can help you to generate the necessary tax forms, such as Schedule D and Form 8949.
Consult with a tax professional if you have any questions or concerns about your crypto taxes.
By following these tips, you can ensure that you are compliant with your tax obligations and avoid any potential penalties or interest.
Here are some additional tips for people who have forgotten to claim taxes on their crypto capital gains in the past:
File an amended tax return as soon as possible. You have three years from the date you filed your original return to file an amended return.
Be honest and upfront with the IRS. Explain why you forgot to claim your crypto income and provide them with all of the necessary documentation.
Pay any back taxes and interest that you owe. You may be able to set up a payment plan with the IRS if you cannot afford to pay the full amount immediately.
By taking these steps, you can minimize the consequences of forgetting to claim taxes on your crypto capital gains.
