Listen up if you’re into crypto, Big changes are coming for tax time in 2025.
Remember that whole thing about people buying and selling crypto without paying taxes? Yeah, Congress isn’t a big fan. So, they’re making companies that deal with crypto report everything to the IRS, just like stockbrokers do.
It’s a bit complicated, so the IRS is taking its time (we’re talking over 280 pages of rules!) to figure out exactly how this will work. Here’s a breakdown of the new crypto tax reporting rules coming into effect in 2025:
- New Form for Crypto Transactions: Starting in 2025, companies facilitating crypto buying and selling will send a new form to the IRS with your information. This form will include details like your name, Social Security number, the amount of crypto sold, and the profit or loss you incurred.
- What are “Digital Assets” and “Brokers” in this Context? “digital assets” refer to valuable items on a blockchain, such as Bitcoin, NFTs, and Stablecoins. “Brokers” in this context encompass any entity that helps you trade crypto and has your identity information. It includes trading platforms, payment processors, and digital wallet providers.
- Phased Reporting Requirements: For the 2025 tax year, companies only need to report the total amount of crypto they sold. However, from 2026 onwards, the reporting will be more detailed, including your original investment amount and whether your trades were short-term or long-term (which impacts your tax rate).
- Benefits for Taxpayers: The IRS anticipates this to be a significant change, with millions of new forms filed annually. The good news is that this should simplify tax filing for you. You’ll receive a comprehensive form with all your crypto gains and losses, eliminating the need to track everything down manually.
- Improved IRS Oversight: The IRS will be able to cross-check your tax return with the information reported by companies. It means they can identify discrepancies and allow you to rectify any errors. In simpler terms, hiding crypto trades from the IRS will become much more difficult.
These rules are still being finalized, so some tweaks might occur before they go into effect.
Want to chat more about your crypto or how these new rules might affect you? We can help! Schedule a consultation with us today – Click on the link below or call us at (408) 708-9330.