2018 was undoubtedly painful for cryptocurrency enthusiasts, and it’s getting even worse when it comes to paying their taxes. However, according to a new CNBC report, half of investors remain unbothered given that they are not planning to report their losses to the IRS.
The reason behind their silence
Investors could be reluctant to report their losses to the US tax authority given that they don’t whether they are eligible for a Bitcoin tax refund. Selva Ozelli also points out that their reluctance to report losses might be inextricably connected to them failing to pay taxes on their crypto gains. Regardless, of their intentions, the rule of thumb is to report all asset sales given that IRS isn’t able to determine how profitable the sale was.
Tax dodges facing the wrath of the IRS
Ex-federal tax prosecutor Kevin F. Sweeney also says that crypto investors could find themselves in a serious predicament by not being transparent with the IRS. The agency has been very clear about clamping down on any unreported crypto, and it’s currently accumulating the necessary data and resources to go after tax dodgers. For instance, software company Chainalysis, one the their recent hires, is tracking ‘the movement of money’ in the crypto economy.