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Saturday, Oct 24, 2026

US tax authorities have eye on crypto investors

US tax authorities have eye on crypto investors

Failure to report transactions could lead to an audit, fines or even jail time
When it comes to cryptocurrency like bitcoin, America’s IRS now wants to know about any transactions, ABC News reported.

“It’s not necessarily like the wild, wild west where you can just have all this secret money and maybe not report it and maybe not pay tax on it,” said Tabatha Tomlinson with H&R Block.

The IRS now asks, “At any time during 2019, did you receive, sell, send, exchange or otherwise acquire any financial interest in any virtual currency?” on the 2019 Schedule 1. The agency is now treating virtual currency the same way as other stocks and investments.

Tomlinson says last summer, the IRS sent out thousands of letters warning taxpayers with cryptocurrency transactions, they may have failed to report income and taxes owed.

If you made any virtual currency transactions, even small ones, you have to report it. The Schedule 1 has a checkmark box on the first page where you can report it. However, experts say the next step after that isn’t crystal clear.

“Depending on how you use cryptocurrency, you have additional responsibilities. So, if you are an investor, it’s going to be very similar to investing in a stock,” said Tomlinson. “You have to know how to do that and if you don’t, there’s not a step by step guidance that says step one, two and three.”

She said the most important thing is to create a paper trail of every cryptocurrency transaction because if you fail to report, you could face an audit, fines or worst-case scenario jail time.

“Because it is so new and so foreign, you may not even get tax documents on it. So, it’s extremely important that you keep detailed records of your purchases.”

Tomlinson says if you have any questions while filling it out, it’s best to contact an expert.
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