With the ubiquity of online transactions and accounts, taxpayers must take the necessary steps to ensure they are in full compliance with tax laws in regard to these transactions. This certainly applies to cryptocurrency transactions, which became significantly more common in recent years. If you have tax-related questions about crypto sales, contact a tax lawyer at SF Tax Counsel.
The markets for Bitcoin and other forms of cryptocurrency have been volatile, leading many people to sell their crypto investments during 2019. The IRS has provided guidance regarding crypto sales, and these must be reported as capital gains and losses on Schedule D (1040). Despite its name, the IRS treats cryptocurrency as property and not as currency. Therefore, it is reported like sales of stocks, bonds, and real estate.
If you did not sell crypto in 2019, you will not need to worry about reporting it on your taxes. If you did, however, it is up to you to determine how much you need to report. You will not receive a 1099 like you would with most investment sales, and you will only receive documentation if you conducted more than 200 transactions and realized gains worth $20,000 or more.
It might be tempting to omit cryptocurrency gains from your taxes altogether, since the IRS does not know about your transactions. However, this is never a good idea. When you try to hide something from the IRS, they will likely discover it down the road, which can lead to substantial liability, penalties, or even criminal charges.
Contact Our Tax Attorneys in San Francisco Today
At the law firm of Diosdi, Ching & Liu, LLP, our San Francisco tax attorneys help with complex tax issues such as cryptocurrency gains and online transactions. Call 415.318.3990 or contact us online to discuss any tax questions or concerns you might have.