Crypto: Players Can't Pay Tax Bill
Many cryptocurrency investors filed tax returns on mind-boggling gains this spring—some in the range of 20 to 30 times their original outlay. But now it’s time to settle up with the IRS, and there’s a problem: The money isn’t there anymore.
“This is the biggest issue in crypto right now,” said Clinton Donnelly, the founder of CryptoTax Audit. “We have several clients who have just gotten wiped out, and they’re just terrified.”
Some lost their entire life savings, and others who worried they could lose their homes.
One client who made $700,000 last year trading between cryptocurrencies, but didn’t think to convert any of that money to cash to save for tax season. Much of that $700,000 had evaporated in the crash.
“They have never thought about estimated taxes and saving as you go,” he said. “They thought there would always be enough at the end of the year to pay for whatever taxes they had.”
One client asked about the legality of simply not reporting. Gordon advised him against it, but admitted: “It’s a pretty sh*tty situation. Because to actually pay the tax, you could be wiped out.”
Edited by Rogerdodger, 28 May 2022 - 12:26 PM.