Heads Up:
Beginning January 1, 2025, which is just two weeks away, all cryptocurrency exchanges in the US, like Kraken and Coinbase, will begin automatically submitting your transaction details to the IRS using the 1099-DA form.
Historically, US users have been responsible for reporting their own crypto gains on tax returns, with many underreporting or neglecting to do so. However, if you engage in any selling activity on your preferred exchange next year, it will be reported to the IRS without your input.
It’s important to be aware that if you sell cryptocurrencies you’ve held for an extended period (acquired in or before this year), the IRS may calculate your cost basis as $0. You’ll need to provide proof of your original purchase if you still have it; otherwise, the IRS will assess any gains based on a $0 cost basis.
For instance, if you purchased a token like DOGE in 2020 for $0.002 and it’s now valued at $0.40, you’ll need to show documentation of that initial transaction to account for the capital gains on the difference. Additionally, the IRS may investigate your trades from around that time to ensure all gains were reported properly.
Summary: There are about two weeks left to organize your financial records, secure your profits, and position your cryptocurrency and USD as you see fit before the end of the year.
do you think folks will start trading less on those big platforms if they know Uncle Sam is watching? or will it push them to platforms outside the US more, maybe? It makes me wonder how other countries handle crypto taxes, like if it’s less strict anywhere else. gotta do my bit of homework to get everything right before D-Day! Anyone else a bit freaked out and scrambling to organize everything? 