All U.S. based crypto exchanges report to the IRS anyone receiving over $600 in sales of crypto in 2021. For prior tax years, many exchanges reported only those receiving over $20,000. In addition, the IRS has used court summons against some U.S. exchanges in the past to obtain taxpayer transaction information. They continue to do so and look for additional ways to gain insight into cryptocurrency transactions.  To learn how to accurately report crypto on your tax return, and the tools and strategies we use for crypto tax returns, get started today by purchasing our Do Your Own Bulletproof Crypto Tax Return course.

The gains from trading and rewards are considered taxable income and must be reported. Gain (or loss) is the difference between the sell and buy price. Price is expressed in the fair market value in USD at the time of the transaction. When you sell (swap or exchange) crypto, it does not matter what you swap it for (another crypto, stablecoin, fiat). That you disposed of an asset is what creates a taxable event.

Whenever crypto is sold (swapped or exchanged), it creates a taxable event. It only matters that the crypto was disposed of. It doesn't matter what it was traded for. Crypto-to-crypto transactions generate taxable events. If crypto is not sold or disposed of, then there is nothing to be taxed or reported. CryptoTaxAudit

DeFi protocols running on decentralized exchanges are not reported to the IRS. DeFi investments on centralized exchanges (Nexo, Kraken, Coinbase, etc) would be reported to the IRS annually. All income whether reported to the IRS or not should be reported on your tax return. CryptoTaxAudit

Trading gains and rewards of most types from DeFi investments must be reported as income.  CryptoTaxAudit Start learning today  

There is a lot to know about crypto and taxes. Take a look at our Six Tax Tips every crypto Trader needs to know. Take a look at https://youtu.be/W-i4UNeATZA  

Tax-loss harvesting isn't useful in retirement accounts, such as a 401(k) or an IRA, because you can't deduct the losses generated in a tax-deferred account. There are restrictions on using specific types of losses to offset certain gains. CryptoTaxAudit

There is no tax on just owning crypto. HODLing is tax-free. However, swapping one crypto for another is a taxable event that must be reported on your return. CryptoTaxAudit

Did you get a Form 1099 from Coinbase or another crypto exchange? Take it seriously. Usually, the income amount seems too high. You must still report the high amount and adjust the difference on your return. Otherwise, expect to get a letter or call from the IRS. CryptoTaxAudit

You must report all your gains (and losses) from selling (swapping or exchanging). Losses reduce your taxes by reducing the amount of taxable gains. Also, you must report your income from rewards of all types. CryptoTaxAudit

Binance.us reports to the IRS, but Binance.com (International) does not. CryptoTaxAudit

On Form 8949, every sale (swap or exchange) transaction is listed along with the selling price and date. But for reward income, only the total rewards are reported on Schedule 1 as other income. CryptoTaxAudit

Crypto owners only report their trading gains and rewards on a return. HODLing is not taxable since nothing is being sold/exchanged/swapped. CryptoTaxAudit

Reporting losses are essential because they reduce your taxable income and taxes. Different types of losses are trading losses, rug pulls, scams, theft, and misplacement. CryptoTaxAudit

Filing a tax return without reporting your crypto income, leaves digital fingerprints behind that will implicate you if the IRS discovers your omission. The IRS uses computers to catch traders not reporting crypto income which the IRS knows about. Expect to get examined. Our membership provides crypto traders with early warning of the IRS audit. How you use that time is very important. You can read more about it here: https://www.

The IRS has three years after filing to audit a return. If income is underreported by 25% (likely if crypto income is unreported), then the IRS gets six years to audit. If a return has false info (fraud) or is not filed, then the IRS has no limit on auditing for that year. CryptoTaxAudit

Crypto trading gains are taxed as regular income at rates between 10%-37% depending on your income. If you hold an asset longer than a year, then lower rates (15-20%) long term rates apply.  CryptoTaxAudit

DeFi is an umbrella term for complex transactions happening on Dexs. Calculating the taxable income is difficult because of explosive innovation.