The IRS is currently auditing individuals who have traded on an exchange and have not filed an IRS 8949 tax form. Exchanges are required to issue 1099 forms to users and to the IRS of their trade history. The IRS therefore is aware of individuals who have traded on an exchange but have not filed an IRS 8949 tax form. Not reporting filing an IRS 8949 tax form of your crypto trades will likely result in an expensive audit and/or criminal penalties.

Aside from fear of the IRS, most cryptocurrency users who transacted in 2018 are actually incentivized to report their 2018 transactions. The IRS not only collects taxes in times when the market is hot, but they also provide relief during tough markets, such as the cryptocurrency market in 2018. If cryptocurrency users realized losses during 2018, they are eligible to recoup some or all of those losses now, or over time. Taxpayers are allowed to deduct losses up to $3,000 and then they can also carry forward any losses above those limits into future tax years to offset future gains. 

For example, if you are married and generated $10,000 in taxable losses in 2018, you will be able to claim a tax deduction of $3,000 this year, which will increase your tax refund. The excess $7,000 of losses can then be carried forward into 2019, and offset dollar for dollar against any gains during 2019 or subsequent years. By reporting your losses in 2018 you will increase your tax refund! Also, you will lock in the ability to offset future gains should your 2018 losses exceed the permitted loss deduction limits.

If you have not filed your cryptocurrency taxes in past years then you can obtain 2017, 2018, and 2019 tax forms with a TaxBit Plus or Pro Plan. If applicable, you can use your losses in 2018 to offset gains in 2019.

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