Haven't Paid Taxes on Crypto Investments? You Might Hear From the IRS.
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Here's your Money Briefing for Monday, May 17th. I'm Charlie Turner for The Wall Street Journal, filling in for J.R. Whalen. It's tax day today. If you made any money last year from trading cryptocurrencies, have you reported it on your tax return? If not, you could be hearing from the IRS.
If you sell a stock or you get a dividend, your broker has to tell the IRS about that so they can check and see if you're compliant. That's not the case with crypto.
Coming up, our tax columnist Laura Saunders tells us about how the IRS has stepped up its efforts to collect taxes on income from cryptocurrencies and what crypto traders should know when filing their taxes. That's after the break.
This podcast is brought to you by ReliaQuest. Cyber criminals are constantly attacking. They want your data. They want your identity. They want your innovation. ReliaQuest fortifies your business with agentic defense, AI that detects, contains, and eliminates cyber threats in minutes. It helps your security team move faster at the work that matters most to protect the business now and delivers insights to help them predict what's next. ReliaQuest, agentic defense for the enterprise. Learn more at ReliaQuest.com. That's R-E-L-I-A-Q-U-E-S-T.com.
Today is tax day, and if you're an investor in cryptocurrencies such as Bitcoin and you've been lax about paying taxes on them, you may want to clean up your act. The IRS is stepping up its pursuit of Americans who fail to report big profits on things like Bitcoin, Ether, and Dogecoin. Our tax columnist Laura Saunders is here to discuss a couple of recent court cases that have strengthened the IRS's hand and the rules that cryptocurrency investors need to know about taxes. Laura, thanks for joining us.
Thanks so much for having me.
How is the IRS increasing enforcement against unpaid crypto taxes?
So, Laura, the IRS is going after crypto tax cheats. How big an issue do they see this as being and how are they going about addressing it?
Well, they take it very, very seriously because right now there's not a lot of reporting of crypto transactions. If you sell a stock or you get a dividend, your broker has to tell the IRS about that so they can check and see if you're compliant. That's not the case with crypto. Crypto is exploding. It's booming. And the IRS worries that it is a vector for criminal activity for people who want to evade who want to deal arms, do drug running. You know, we have seen this borne out in several cases. They're also worried about widespread underpayments just from people who are crypto enthusiasts because there's not a system for this. So they're doing all kinds of things in all kinds of ways. But these two court cases are really important.
Are they focusing on everyone who's made money trading cryptocurrencies or those who have made big money?
Well, the two court cases, one in Boston and one in California, are focusing on the high rollers, the people with a lot of money at stake. They have persuaded a court, because the IRS doesn't get these records, they have persuaded a court to allow them to rummage around in, as it were, the records of Kraken, which is a crypto exchange, and Circle, which owns Poloniex, which is another crypto exchange. And the IRS wants the records of everybody who had more than $20,000 in transactions in cryptos in the years 2016, 17, 18, 19, and 20. And they want a lot of information about these people.
What information is the IRS specifically asking for?
Well, they want to know the name, the physical address, the date of birth, the taxpayer ID number, and they especially want email addresses and phone numbers because they found that when they did another search like this, they couldn't find 750 people who had accounts at Coinbase that sold over $100 million.
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