'You’re playing with fire if you don’t report it.' Here's what happens if you don't disclose crypto activity this tax season.
Cryptocurrency may be subject to capital gains when exchanged or sold at a profit. Swapping digital coins, cashing out for U.S. dollars or even making a purchase may be taxable events, Losi explained.
If you held digital assets for more than one year, you might qualify for long-term capital gains rates of 0%, 15% or 20%, depending on your taxable income., triggering short-term capital gains, levied at regular income tax rates, up to 37% for top earners.may not be easy with limited reporting from digital currency exchanges.If you don't report taxable crypto activity and face an IRS audit, you may incur interest, penalties, or even criminal charges.
While the chances of IRS scrutiny are lower with limited staffing, the agency may pursue larger amounts of money, he said.Tax specialist product manager at Accointing