Many tax agencies are increasing their scrutiny of crypto tax returns. Most crypto tax filers will not be audited, but some will. The best way to prepare for possibility of a crypto tax audit is to keep thorough records of all crypto transactions and any related communications. How common are crypto tax audits? How common are crypto tax audits?
How do you know if an IRS crypto audit is imminent?
The most common way you know an IRS crypto audit is impending is due to a notice from the IRS. The IRS has been sending out these letters since 2019 and there’s three different versions - letter 6174, 6174-A and 6173.
Is the IRS cracking down on crypto?
The IRS has made one thing clear in recent years - they’re cracking down on crypto and IRS crypto audits are on the rise. So if you’re one of the many investors who has received a notice or an audit request, don’t panic. We’ve got everything you need to know about preparing for an IRS crypto tax audit. Should I be worried about a crypto tax audit?
How is the IRS addressing cryptocurrency non-compliance?
The IRS is actively engaged in addressing non-compliance related to cryptocurrency transactions. In 2019, the IRS sent out more than 10,000 tax notices to potentially non-compliant taxpayers. In mid-2020, it sent out another batch of tax notices to suspicious taxpayers.
