Engaging in Virtual Currency Transactions
Many people are hoping to avoid the IRS by engaging in virtual currency trading and the IRS is acutely aware of this, which is why they are ‘on the hunt’ for taxpayers who sell, trade, or receive bitcoin or other virtual currencies.
What this means is that you may be caught in the crossfire, even though you’re doing everything by the books. If they believe you have a virtual currency account, they will send you letters.
In an effort to find people who do not report their income, they even went to federal court to get names of customers of Coinbase, a well known virtual currency exchange. They even have teams especially dedicated to such audits.
If you’ve received, sent, sold, acquired, or exchanged any financial interest in virtual currency, then you must say son on page 1 of your Form 1040.
That’s it for this list! These are things that the IRS will take a very close look at. Again, if you do everything right, you have nothing to worry about! Good luck with your taxes!