The U.S. Internal Revenue Service (IRS) has started sending out new letters to cryptocurrency owners suspected of owing crypto-related taxes. A tax expert has shared with news.Bitcoin.com what crypto owners should know, including how to handle tax letters from the IRS and avoid an audit.
How to Deal With IRS Letters
The IRS has ramped up its efforts to ensure that cryptocurrency owners pay all crypto-related taxes. It has begun sending out a new round of tax letters similar to the ones sent to about 10,000 crypto owners last year. There are three types of letters, referred to as Letters 6173, 6174, and 6174-A. In addition, the IRS recently moved the cryptocurrency question from Schedule 1 to the top of Form 1040, the main form used by about 150 million people to file their taxes.
Clinton Donnelly, the founder of Donnelly Tax Law, has helped over 12,000 crypto owners with their tax returns, avoiding over $40 million in gains by using like-kind exchange calculations. He has shared some insights with news.Bitcoin.com to help crypto…