Crypto Investors Skip Reporting Sales to IRS Despite New Rules
Many cryptocurrency investors are not reporting their digital asset sales to the IRS, according to new research. This is happening even as the tax agency has created stricter rules requiring crypto platforms to track and report user transactions.
Academic research tracking crypto investors over several years found they may be dodging taxes on their digital asset sales. The findings come as the IRS has ramped up efforts to catch unreported cryptocurrency transactions.
Starting with last year's tax data, major crypto platforms including Coinbase, Kraken, and PayPal must report users' gross proceeds directly to the IRS through Form 1099-DA. This new requirement makes it much easier for tax authorities to spot people who don't report their crypto gains.
Despite these new reporting rules, Forbes reports that many taxpayers still fail to report cryptocurrency transactions and gains as tax day approaches. The gap between what platforms report and what individuals declare could trigger more audits.
The IRS has also partnered with data analytics company Palantir to identify the highest-value audit targets, potentially putting crypto investors in the crosshairs. The agency's push comes as digital asset trading has exploded in popularity over the past few years.
If you own crypto, the IRS is cracking down on unreported sales and could audit you. The agency now gets reports directly from major platforms like Coinbase and PayPal, making it easier to catch people who don't pay taxes on crypto profits.
Watch for increased IRS audits of crypto investors as the agency compares platform reports with individual tax returns.
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