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The IRS Gears Up to Combat Crypto Tax Evasion & How to Avoid an Audit | |
MusicCityAnon
User ID: 78348024 United States 03/08/2021 10:14 PM Report Abusive Post Report Copyright Violation | [link to www.zenledger.io (secure)] See also The Latest IRS Guidance on Crypto: [link to www.zenledger.io (secure)] "The IRS has been slower to audit tax returns in recent years due to the COVID-19 pandemic, but there are signs that it’s stepping up its enforcement actions related to cryptocurrencies. In addition to a new question at the top of Form 1040, the agency has issued several warning letters and sought to hire crypto experts to track down tax evaders." Common IRS Audit Triggers: High levels of income - Most audited tax returns are for taxpayers that earn $500,000 or more each year, whereas income between $25,000 and $200,000 were generally safe. High earning crypto traders and investors could be more likely to experience an audit. Unreported income - Crypto exchanges typically send 1099-B or 1099-K forms to clients that exceed certain transaction thresholds. Since the IRS receives copies of these, a failure to report income triggers the IRS’ Automated Underreporter Program. Itemized deductions International assets - Foreign assets valued at more than $50,000 must be reported to the IRS along with all accounts with balances over $10,000. If you hold crypto assets in these amounts overseas, you could face greater IRS scrutiny. Suspicious Deductions - The IRS scrutinizes taxpayers that take home office or business vehicle deductions to ensure that they aren’t really for personal use. If you trade crypto and make these deductions, it could increase the relative risk of an audit. Hobbies as a business- There are a lot of tax rules designed to separate hobbies from businesses. Crypto investors looking to diversify into other assets, such as farms, may not be able to claim those assets as businesses without added scrutiny. Mathematical mistakes - The IRS automatically checks tax returns for accuracy, so it’s important to avoid any basic mathematical mistakes. If you have a lot of crypto transactions, you should ensure the math is correct when aggregating them. Large spending or deposits - The IRS requires businesses to notify them when large cash transactions of more than $10,000 take place. If you make a $10,000 cash transaction with crypto proceeds, you could invite more IRS scrutiny. Our World Is Not What We Think It Is | Be Fearless | Break Free Or Die Trying | We Are Immortal Beings | Life Is But A Dream | My Soul Name Is KOLOYAC BOKEIO | My Sacred Origin Is Arcturus| |
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