What does owing back taxes really mean for your finances? Nobody wants to get a letter from the IRS about back taxes, but trying to close your eyes until it all goes away will make things much worse. As a taxpayer, you should know that the IRS offers many tax relief options that will get you on the road to back tax forgiveness. 

Don’t let the burden of owing the IRS money stifle your financial plans or peace of mind for one more day. The first step in figuring out how to get rid of back taxes is finding out how much you owe the IRS.

How to Find Out How Much You Owe the IRS

The IRS allows you to make an online account to view what you owe. You can also use your account to apply for a tax payment plan as one of your debt relief options. Setting up this account can be a little overwhelming due to the breadth of information the IRS requires. If you’re unsure about how to make first contact with the IRS, you can bring in a tax pro with experience in this arena to help you get it done.

What Are the Tax Relief Options When You Owe Money to the IRS?

There are several ways to reduce back taxes. If possible, pay the full lump sum that you owe right away. This is the simplest way to put a stop to the IRS’s pursuit of your back taxes. Don’t let unfiled returns stop you from paying what you owe; it’s essential to file all missing returns even if you can’t make a full lump payment right now. The IRS won’t work with you on back tax relief if you have any unfiled returns. Not filing your taxes is not a way to hide from the IRS. They use other sources to determine how much you owe even if you never file a return.

Installment Agreement (IA)

The most common option for tax relief is a payment plan. With the IRS, a payment plan takes the form of something called an IRS Installment Agreement (IA) that chops your total tax debt into smaller payments over 72 months. In addition to making your payments more realistic, an IRS IA pauses all penalties and interest as long as you’re staying current with payments. The IRS will generally not enforce collections as long as a payment plan is in place. However, if you default on a payment, the IRS will subject you to all of the previously held-back interest and penalties.

Offer in Compromise (OIC)

An IRS Offer in Compromise (OIC) is a settlement for taxpayers who cannot pay the full amount owed in back taxes. With this settlement, a taxpayer makes an offer to the IRS based on how much they can afford to pay. The IRS will either accept or reject the offer based on the financial details of the taxpayer. The IRS can be very restrictive when it comes to qualifications for this type of settlement. As a result, most taxpayers who are serious about being qualified for OICs work with tax experts who are familiar with the IRS to present offers that are more likely to be accepted. It’s also important to comply with all of the IRS’s requirements when submitting your application and financial records.

Currently Not Collectible (CNC)

If you’re under extreme financial hardship, you may be able to petition the IRS for Currently Not Collectible (CNC) status. With this agreement, the IRS will defer your debt obligation until you can begin making payments. You will be free from worries of having penalties, interest, fees, levies, and wage garnishments as long as you are under CNC status. 

Some situations where you might qualify for CNC relief include being on Social Security benefits, being unemployed, or having little to no money left over at the end of each month after covering your basic living expenses. The IRS will check back on your status periodically once a CNC “closing code” has been placed on your record to see if you’re in the position to make payments. 

While the IRS may not necessarily ask you to pay all at once if your income grows, they may ask you to begin an Installment Agreement. In some cases, a taxpayer may never pay the back taxes owed because the statute of limitations kicks in before their financial situation changes. While only a small number of people qualify for Currently Not Collectable status with the IRS each year, talking to a tax professional can help you gauge your likelihood of being approved for back tax forgiveness.

Penalty Abatement

Many taxpayers don’t realize that they can have penalties forgiven under certain circumstances. While the IRS does slap on penalties and interest if you’ve failed to file or pay taxes, they aren’t necessarily permanent. You may be able to have penalties removed if this is the first time you’ve failed to file taxes on time. Additionally, the IRS may remove penalties if you had a good reason for not filing your taxes when you should have. While being “too busy” is not a valid excuse, things like illnesses or natural disasters are.

How Can Tax Group Center Help You?

While the IRS may seem intimidating, you can rest assured that the agency’s goal is to collect as much of what you owe as possible. This is why the IRS is surprisingly generous when it comes to options for tax forgiveness. Sitting down with a tax expert to determine which relief option will provide the best back taxes help is the fastest way to enjoy the highest level of tax forgiveness available for you.

If you’re wondering how to get rid of back taxes, the Tax Group Center team can help you work out a plan to reduce penalties and interest while getting back on the road to a clear financial future. When looking at your situation, we’ll consider factors like an upcoming statute of limitation, your income situation, and the total debt you owe to determine the option that will leave you in the best shape. 

While not everyone will qualify for every type of relief, almost all taxpayers are at least in the position to work out payment plans with the IRS. The first step may be as simple as getting all caught up with unfiled returns from previous years. Our team understands tax relief options from top to bottom because we’ve been working with the IRS on behalf of our clients for more than 30 years. Let us walk you through the terms of all of the different tax relief options on the table. Contact Tax Group Center today for a consultation.

If You Owe the IRS, Can You Buy a House?

Are your dreams of owning a home dashed if you have tax problems? The answer can depend on your particular situation. The short answer is that owing the IRS money won’t automatically prevent you from qualifying for a home loan; a tax debt doesn’t equal a blanket rejection for a mortgage application. 

That doesn’t mean that you should ignore a tax debt! Things like missing tax returns and liens throw up some serious red flags for loan officers. While your lender’s terms and policies will ultimately determine your eligibility for a home loan, a negative tax situation will likely hinder you from owning a home. Take a look at what might be in store if you’re trying to get a mortgage without first getting everything squared away with the IRS.

Your First Obstacle to Being Approved for a Home Loan 

If you’re asking yourself, “Can I get a mortgage with unfiled taxes?” then you should keep reading. 

You might not get very far with the mortgage application process if you have unfiled tax returns in your recent history. Generally, lenders request W-2 forms going back at least two years when approving home loans. Lenders use your tax returns to verify your income as part of the application process. They need proof that you have consistently earned enough in recent years to fulfill your monthly mortgage payments for a particular home. Unfortunately, providing recent W-2 returns verifying your income becomes impossible to do if you haven’t filed your taxes. From the lender’s perspective, this is a big red flag.

Many lenders can’t provide you with a home loan if you cannot verify your annual income. That means you’re stuck until you prepare and file all unfiled tax returns. The good news is that this is generally very easy to do. There’s no need to be afraid of the IRS if you skipped a year of filing. They just want you to get current with your taxes. You may even finally get a tax refund to help build up your down payment for a house once you file. 

If you’ve been hesitating to file because you fear that you owe money to the IRS, filing is the first step to obtaining access to tax relief solutions that will help you clear your debt while avoiding interest and penalties. What’s more, being in a payment plan with the IRS to pay down a tax debt won’t automatically disqualify you from being approved for a mortgage.

Getting a Tax Lien Mortgage

If the IRS has placed a tax lien on your property due to unpaid taxes, getting a new mortgage becomes even more challenging. You’ll need to get that lien handled before being approved for a mortgage in nearly all cases. Owing taxes and having a lien are two very different circumstances from a mortgage loan officer’s perspective. In some cases, even if you have a tax lien, mortgage approval is possible if you’re currently on a repayment plan with the IRS. Mortgage lenders will need to see that you’ve been making consistent payments for a specific length of time before they’ll even consider working with you. What’s more, lenders may examine your application to ensure that you can manage potential mortgage payments at the same time as your lien payments. Lenders will often fold your monthly tax repayment into your debt-to-income ratio to make sure that you’re realistically capable of staying current with your mortgage to avoid foreclosure.

Be prepared to show lenders that you have a valid, current payment plan agreement with the IRS if you’re trying to obtain a mortgage while owing the IRS money. This may be your only path for getting a loan if you are not current with your tax payments. Most lenders will apply a special manual underwriting process for your loan if you’re making payments to the IRS.

The IRS Isn’t Your Only Concern

Can you buy a house if you owe taxes to the state? Liens are just one of the consequences of not paying your state taxes. Unfiled and unpaid state taxes can harm your chances of obtaining a mortgage just as much as IRS debt.

Can You Buy a House If You Owe Taxes?

It’s important to look beyond just eking by with the bare minimum when applying for a home loan. If you’re wondering, Can I get a mortgage with unfiled taxes? Then you should know it’s very possible. But failing to address your underlying debt with the IRS or state taxing authorities doesn’t put you in the best spot for negotiating favorable loan terms. 

If you’re allowing tax problems to cloud your record instead of taking advantage of options for IRS debt relief, you’re setting yourself up for a high interest rate. The big worry with this is that you’ll potentially end up paying tens of thousands of dollars more in pure interest than you should over the life of your mortgage. A lower interest rate with better terms increases your buying power to put you in a much better financial position as a buyer.

What’s the Plan If You Are Trying to Buy a Home With IRS Debt?

If you’re gearing up to buy a home, the time to address unfiled or unpaid taxes is now. The necessary steps will depend on where you stand with your ability to pay what you owe. The type of loan you’ll be applying for will also impact how to approach the application process. However, this is the general blueprint to follow when trying to obtain a mortgage with tax problems:

• Work with a tax professional to enter into a repayment plan with the IRS. Make sure to get a copy of the repayment agreement that details what your monthly payment amount will total. You may need to provide this documentation to your lender.
• Next, focus on making payments on time. Most lenders require between three and 12 consecutive payments on your record before they approve you for a mortgage.
• When applying for mortgages, inform your lender about the agreement that is in place. The lender may ask for a copy of your tax repayment agreement with proof of payment attached.
• If you’re applying for a mortgage but have a tax lien, you may need to obtain something called a Subordination Agreement from the IRS. This document confirms that the IRS’s lien will be secondary to the lien placed on your home by the mortgage company in the event of a foreclosure.
  
  

The dream of homeownership is not out of your grasp if you owe the IRS taxes, but allowing tax debts or unfiled returns to linger does make qualifying for a mortgage harder. Addressing tax problems as soon as possible is going to get you on track to being approved for a home loan. Ultimately, you will be in much better shape to afford a home once you’re able to get IRS penalties and interest out of the picture. However, the IRS won’t give you the opportunity to settle or pay off debts if you don’t reach out to ask for assistance.

If you’re hoping to come back strong from a tax issue to get approved for a home, Tax Group Center is in your corner. In many cases, the first step is simply finding out how much you owe in taxes. Getting that figure in your hands will help you get a realistic idea of how far away you are from getting approved for a home. Once we help you see where you are with tax debt, we’ll work on your behalf to establish debt forgiveness or installment agreements. Contact Tax Group Center today for a consultation.

Do you want to know if you owe the IRS money? You actually don’t have to wait until you receive a letter from the IRS to figure out your IRS tax balance, because all taxpayers have the right to look at their balances directly. The IRS provides four options for doing this:

• Check your balance online.
• Check your balance over the phone.
• Send a request for a balance report by mail.
• Have a tax expert get the information for you.

Each option has its own set of pros and cons. What’s more, you’ll need to be prepared to make your request during specific windows of availability for some of the options. 

Let’s take a deeper look at how to check your IRS balance using these four options.

Option 1: Check Your Balance Online

The IRS hosts an ultra-convenient portal that taxpayers can use to view their IRS account details online. In addition to displaying your IRS account balance for owed taxes, the portal also gives you access to your payment history going back 24 months as well as your past years’ tax transcripts. While this resource is free, you do have to go through a setup process that can take time. 

The IRS requires you to provide a full roster of information to verify your identity, including your Social Security number (or Individual Tax Identification Number), date of birth, mailing address for your last return, email, and cell phone number. They’ll also ask for information about your credit cards, loans, mortgage, and more. 

Another hindrance that goes along with this option is that the IRS only makes this portal accessible during certain windows of the day (Monday: 6 a.m. to Saturday 9 p.m./Sunday: 10 a.m. to 12 a.m.). You may also find that the site is down for routine maintenance pretty frequently. This can be tough if the only time you have to sit down to try to figure out your IRS account balance is in the evenings following work. 

Option 2: Call the IRS

Yes, the IRS will pick up the phone for taxpayers! This can be a good option if you feel uncomfortable about supplying so much personal information through an online portal. Just remember that it’s typical to experience wait times of up to 30 minutes when you call the IRS to check your balance. In addition, the line has limited hours that last from 7 a.m. through 7 p.m. local time.

Number for individuals: 1-800-829-1040

Number for businesses: 1-800-829-4933

Number to request transcript by mail: 1-800-908-9946

Option 3: Make a Request by Mail

If putting in the time to set up an account online or waiting on the phone won’t work for you, you can send a mail request to the IRS. This is unsurprisingly the slowest option, so bear that in mind if you’re worried about interest and penalties being pinned to your IRS balance while you wait for documents to arrive in the mail. The IRS won’t waive penalties just because you were waiting to hear back about your balance. You’ll also need to verify that the IRS has your current address because the documents won’t get to you if there’s an older address on your file.

It’s also important to know exactly what you’re requesting when you make a “snail mail” request for your IRS account balance. If you filed a 1040, 1040A, or 1040EZ, you’ll want a document called the “Tax Transcript.” Anyone who filed another type of tax form will need to ask for something called the “4506-T Request for Transcript of Tax Return.” One of the more confusing aspects of this is that a transcript only covers one year. Additionally, penalties and interest may not show up on this transcript.

4. Have a Tax Professional Retrieve Your Balance for You

If you’re feeling intimidated about reaching out to the IRS, you’re not alone! Many people prefer to avoid making contact with the IRS on their own because they’re generally unfamiliar with how the IRS works. Others simply don’t have the time to deal with creating an account or waiting on hold for an IRS representative.

When you put the task in the hands of a tax professional, they will reach out to the IRS to retrieve your balance information. The big benefit of doing this is that you already have someone working with you who can provide guidance if it turns out you owe the IRS money. If this is the case, a tax professional specializing in debt relief will be able to introduce you to some relief solutions that will potentially allow you to get debt managed without penalties and interest.

What to Do When You Owe the IRS Money That You Can’t Pay

You may discover that your IRS balance is at $0 after getting access to your balance information. If this is the case, you should be all set! The only exception is if you requested a paper transcript by mail, because penalties and fees aren’t always represented on those documents. That means that a small amount of unpaid fees could technically become an “unpaid tax debt.” If this is a concern, you can have a tax professional look into the situation for you to confirm that you don’t owe anything more to the IRS.

If you do have a balance, the best course of action is to pay it off. If you can’t pay the balance in full, it’s time to explore options for debt relief through the IRS Fresh Start initiative. The most common form of IRS debt relief is an Installment Agreement (IA) that allows you to pay off your balance over six years (72 months). You may be able to freeze or reduce your balance using options like an Offer in Compromise (OIC) or Currently Non Collectible (CNC) status if you can prove that you’re financially unable to meet your debt obligation.

The one thing you don’t want to do after discovering that you have an IRS balance is to ignore it. The IRS will assign fees, interest, and penalties if your balance remains unpaid. This will eventually lead to liens and levies that give the IRS the right to seize wages, bank accounts, and assets from you in an attempt to settle your debt.

Work on a Tax Settlement for Your IRS Balance

You need a clear picture of what you owe before the IRS begins sending you letters about penalties and collection efforts. You can begin the process of finding out your balance today using the tools available from the IRS. For many taxpayers, the easiest way to get the clearest answer is simply to have a tax professional request a balance report on their behalf.

If you do owe the IRS money, it’s important to get plans in motion for seeking a tax settlement as quickly as possible to avoid IRS penalties. Your IRS balance can grow substantially if you allow the payment deadline to go by without entering into some type of installment agreement or forgiveness plan with the IRS.

At Tax Group Center, we help taxpayers understand their tax balances and how to best pay them off. If you already have a payment plan, we can also help you find your IRS payment plan balance. If you have unfiled tax returns that are preventing you from being eligible for tax relief, we can help you get that taken care of before applying for IRS Fresh Start options. Our tax lawyers have been helping clients work with the IRS to settle tax debts for 30 years. Let us help you get your IRS balance squared away if lingering tax debt is causing you stress. Contact Tax Group Center today to get started!

If you’ve received the IRS letter CP14, you probably have some questions. The good news is that there’s still a lot you can do before it becomes a problem that impacts your finances or credit. However, the reality is that you probably do owe the IRS unpaid taxes if an IRS notice CP14 has arrived in your mailbox. Let’s go over what this form means and what options you have, and you’ll see why acting quickly is in your best interest.

Why Did I Get a CP14 Form From the IRS?

The IRS CP14 Balance Due notice informs taxpayers that they have an unpaid tax balance. The most common reason why taxpayers receive this notice is because they filed a tax return without actually paying the full amount of taxes owed with the return. If this is the case, you may have incorrectly interpreted what you owed. You may have also knowingly failed to pay your balance because you’re unable to cover what you owe in taxes right now. Here are some other common causes for CP14 letters:

• You owe a balance because the IRS is charging you a penalty for not filing your taxes by the filing deadline.
• You didn’t withhold enough taxes based on your income during the year.
• You failed to make your estimated quarterly tax payments in April, June, September, and January.

The good news is that your failure-to-pay penalty may be forgiven if this is your first time receiving it. Generally, the IRS is pretty generous if you request a first-time penalty abatement. However, the IRS is pretty strict when it comes to penalties for not covering your quarterly taxes on time. Some taxpayers are able to work something out to get that penalty dropped when creating a larger plan for debt relief with a tax lawyer.

What about interest on unpaid taxes? While you won’t be charged interest on the money you owe in late taxes as long as you pay your debt in full by the deadline on the notice, interest begins accruing on any unpaid amount left by that date. If you apply for a relief option, action on penalties and interest is typically suspended as long as you’re complying with the terms of your relief plan.

Could an IRS Notice CP14 Be a Mistake?

In most cases, you will at least understand why the IRS has applied a balance to your account. It’s very common to miss tax payments due to human error or lack of funds. If you only owe a penalty, the total may be low. 

Do you feel that the IRS has made a mistake, and that you paid all of your owed taxes in full by the deadline? Make sure you look over your tax return and payment records before sending the IRS any payments. While rare, it’s possible that the IRS has made an error. Don’t forget to give the deductions and credits on your return a second glance, too. In some cases, you may be able to reduce your tax liability by filing an amended return. This can potentially wipe out the owed balance by reducing what you actually owe in taxes.

What to Do After Receiving a CP14 Letter

Do not ignore your IRS CP14 letter just because you feel the IRS has made an error. The IRS will treat your debt as active even if it’s an error until you correct the situation! Once you’ve confirmed that the IRS’s assessment of your debt is correct, you have a few options. Here’s a look at how taxpayers should handle C14 letters:

• Pay Your Balance in Full: If you’re able, paying your debt in full by the deadline on your letter is the most direct way to remove yourself from the IRS’s radar.
• Request an Extension: The IRS is sometimes willing to give taxpayers who owe balances more time to pay. In some cases, you will be given up to 120 days to come up with the funds needed to get your balance to $0. This is what’s known as a Temporary Delay of Collection Process.
• Ask for Tax Relief: If you can’t cover your balance, the IRS may allow you to utilize a tax relief option.

The most common form of IRS debt relief is something called an Installment Agreement (IA). Using an installment agreement, you can pay off your balance over a span of time lasting up to 72 months (six years). If you can prove financial hardship, the IRS may allow you to enter into an Offer in Compromise (OIC) or Currently Non Collectible (CNC) status to reduce or freeze your debt. Keep in mind that both relief options require an extensive application process that requires you to prove that you’re unable to pay your tax debt by providing financial information and records.

Why You Shouldn’t Ignore a CP14 Letter

If this is your first time dealing with the IRS, it’s understandable if you feel intimidated. We want you to understand that having an IRS tax balance doesn’t have to snowball into a big ordeal if you address the issue promptly. The IRS is often more than willing to work with taxpayers with balances. In fact, this is precisely why the IRS has such a robust collection of relief options under its Fresh Start initiative.

There’s no reason to try to evade the IRS if you can’t pay your balance. If you try that, the serious consequences begin piling up. The IRS will begin applying liens, levies, and other penalties to your account if you don’t respond by the deadline on your CP14 letter. Unfortunately, this means that the IRS will try to seize your wages, bank accounts, and assets in an attempt to recover what you owe on your tax balance. This issue can end up haunting you for years even if your tax balance wasn’t that high. If the IRS decides to levy your wages, your employer will have no choice other than to comply. What’s more, nonpayment penalties that are added to your balance can end up costing you much more than what you originally owed in taxes.

It’s Time to Ask a Tax Expert: Get Help With Understanding Your CP14 Notice

If you’ve received the CP14 letter, the team at Tax Group Center is here for you. We can confirm what you owe, and you may be able to use the IRS CP14 pay online option through the IRS’s Direct Pay portal to pay as quickly as possible. Depending on your IRS CP14 reason for payment, our team may be able to help you explore options for penalty abatement and debt relief after addressing any unfiled returns from the past. Contact Tax Group Center if you have questions about a CP14 notice you’ve received from the IRS. Our team has been helping clients work with the IRS for 30 years, and we’re ready to help you, too!

What does the IRS think of cryptocurrency? If you’re dabbling with Bitcoin and other virtual currencies, you need to know the Internal Revenue Service’s stance on things. Do you pay taxes on Bitcoin and other virtual currencies? Absolutely! Skirting the use of actual dollars doesn’t mean skirting the tax obligations that go along with using actual dollars. 

While cryptocurrency tax laws are still emerging, the one thing that’s as clear as day is that the responsibility falls on the crypto user to calculate, track, and pay all taxes owed. Take a look at the basics of virtual currency tax rules to avoid IRS penalties and interest.

Do You Pay Taxes on Bitcoin? Some Crypto Tax Basics

Any cryptocurrency units that you purchase, sell, or mine are considered taxable as property by the IRS. As a result, you should view cryptocurrency that you own more like stocks or a vacation home than currency. That means being aware of capital gains and losses when you move your cryptocurrency. However, there is a caveat to that rule that makes understanding how to report cryptocurrency on taxes confusing. The IRS does view cryptocurrency as income if you are paid in cryptocurrency by an employer. 

Here’s a rundown on some of the big things to know about cryptocurrency and your taxes:

• There isn’t a separate “cryptocurrency tax rate.” Crypto fair market value is converted to dollars for tax purposes.
• Cryptocurrency is generally treated as property.
• All property-transaction taxes apply to crypto transactions.
• Wages paid in cryptocurrency are taxed as regular income.
• Self-employment income paid in cryptocurrency is taxed as regular self-employment income.
• If you pay for services using cryptocurrency that you’re holding as a capital asset, you must report a capital gain or loss because you are exchanging an asset for a service.
• Cryptocurrency received as a gift will not become recognized income until you sell, exchange, or dispose of it.
• Cryptocurrency paid to charitable organizations will qualify for the charitable deduction contribution. Generally, the deduction amount is equal to the fair market value of the currency at the time of your donation.

You must report any sales or capital transactions involving cryptocurrency throughout the year. Typically, you will be reporting capital gains and losses using Form 8949: Sales and Other Dispositions of Capital Assets. You will also be responsible for detailing gains and losses using Form 1040/Schedule D: Capital Gains and Losses. 

In anticipation of taxes, you should be keeping impeccable records and documentation regarding all sales, exchanges, and disposition of cryptocurrency. It is especially important to document the fair market value of all currencies at the times of your transactions.

Bitcoin as Wages: How Is Bitcoin Taxed When an Employer Pays Me in Cryptocurrency?

If your employer pays you using Bitcoin or another virtual currency, you’ll need to report that income the same way you’d report any income you’ve earned. 

The good news is that your employer will be the one doing most of the hard work in regards to converting Bitcoin to dollars on your W-2 form. That means that you’ll see the Bitcoin value that you were paid converted to U.S. dollars on your form. Throughout the year, your Bitcoin salary will also be subject to the same withholding amounts for Social Security and Medicare as regular wages based on the converted dollar value.

Be Prepared for Extra Work When Keeping Track of the Cryptocurrency Tax Rate

When you do business using cryptocurrency, the IRS expects you to keep track of fluctuating values to accurately fulfill your tax obligations. This is especially critical if you do a lot of Bitcoin mining, selling, or trading. Here’s what you’re responsible for:

• Recording the fair market value of the Bitcoin when you mined or purchased it.
• Records of the fair market value of your Bitcoin when you used it.
• Records of the fair market value of your Bitcoin when you sold it.

While you’re being held to the same tax standards as people purchasing and selling stocks, you may not be getting the same paper trail that stock buyers are getting. Someone working with a broker would rely on a Form 1009-B or Form 1099-K at the end of the year to report transactions for tax purposes. With Bitcoin tax, you’re generally on your own when it comes to keeping records.

In most cases, third-party crypto networks are only required to send tax forms to customers who ordered more than $20,000 in cryptocurrency and made at least 200 transactions. Five states (Arkansas, Massachusetts, New Jersey, Vermont, and the District of Columbia) have even lower thresholds ranging from $600 to $2,500. However, you’re still responsible for reporting your crypto gains on your taxes even if you didn’t hit the $200,000 or 200-transactions thresholds. This is where a lot of people run into trouble; they assume that not receiving tax forms means that they don’t have to report cryptocurrency on taxes.

While crypto networks are supposed to send you the right forms once you hit certain thresholds, the bottom line is that you’re ultimately responsible for reporting all crypto gains. It’s wise to keep your own perfectly organized records regarding all transactions even if you think you’ll be getting a form. Your transaction history on the crypto platform you use can also be helpful for keeping your own records.

What About Capital Losses on Bitcoin and Other Virtual Currencies?

You can take advantage of many of the usual tax deductions if you access tax preparation services. The IRS does allow cryptocurrency users to deduct capital losses. The process works essentially the same as deducting capital losses for any stocks or bonds you’d own. Under current rules, you are permitted to write off cryptocurrency losses of more than $3,000. The volatile nature of cryptocurrency makes this an especially appealing tax perk for crypto users and traders. What’s more, your losses may help counteract any capital gains owed from your crypto endeavors.

How Is Bitcoin Taxed? Getting Answers From Tax Professionals

If you’ll be filing taxes that include Bitcoin and crypto payments, your return is going to be very interesting to the IRS. While any mistakes you make may be honest ones stemming from the newness and uncertainty of how to pay taxes on Bitcoin, the IRS will still hold you to the same standards as all other taxpayers when it comes to accurately and honestly filing and paying your taxes. Make sure you’re using tax help resources to ensure that you’re not putting yourself at risk for audits or penalties. At Tax Group Center, we use our 30 years of experience with the IRS to help today’s generation of crypto users enjoy the same steadfast tax support as people filing returns with typical wages and investments. If you have questions about virtual currency tax laws, contact us today.