Hi,
Many crypto investors are either overpaying their taxes or heading for an IRS letter, because their exchange records don’t match what’s on their return. With the IRS’s new Form 1099-DA, that gap is now easy for them to spot.
You don’t need to be a day trader for this to apply to you. If you’ve done any of these, it’s worth a review:
- Bought, sold, or swapped crypto on Coinbase, Kraken, or any other exchange
- Moved crypto between wallets or exchanges
- Earned staking, mining, or DeFi rewards
- Sold crypto at a loss, or are currently holding coins that are down
- Bought crypto years ago and don’t have your original purchase records
Here’s how the savings work:
- Tax-loss harvesting: harvesting $40,000 in losses that offset short-term gains saves about $9,600 in federal tax at the 24% bracket.
- The loophole is still open: unlike stocks, you can currently sell crypto at a loss and buy it back right away. Congress is working to close this, so 2026 may be one of the last years to use it, and the window closes December 31.
- Cost-basis method: choosing HIFO instead of your exchange’s default can cut reported gains by $18,000 or more.
- Missing basis: when your purchase price is missing, it often defaults to $0, so you pay tax on the entire sale. We fill in those gaps before the IRS does the math for you.
- Staking rewards are taxed as income when you receive them: $12,000 in rewards means reserving about $3,600, so there’s no surprise in April.
Crypto is rarely the only moving part. When your exchanges, your books, and your returns are handled by different people, things slip through the gaps, and that’s exactly where the IRS looks. Here’s how we keep it all connected:
- Your crypto, reconciled: every 1099-DA matched to your actual wallets, with nothing left for the IRS to question
- Your books, always current: monthly or annual bookkeeping with a bookkeeper who knows your financesÂ
- Your quarterly estimates, planned ahead: you’ll know what you owe before April, not after
- Your savings, fully mapped: a one-hour review of every credit and deduction you qualify for, crypto and beyond
- Your back, covered: if an IRS mismatch letter ever arrives, we handle the response
- Your returns, in one place: personal and business, prepared by the same team that knows your whole picture
Reply to this email by Friday and we’ll set up a free 15-minute call with our senior tax advisor to go over your situation. Bring your exchange statements, your last invoice from your tax preparer, and any crypto tax software you currently use, so we can discuss how you can have everything under one roof.
Sincerely,
—
George Dimov, CPA
Licensed and Insured
(833) 829-1120 toll free
(212) 994-8081 Fax
www.dimovtax.com