1099-da crypto education Dec 19, 2024

The Biggest Crypto Tax Changes Since 2014: How to Protect Yourself from the IRS's New Regulations

The IRS is shaking up crypto taxation, and if you're a digital asset investor, these changes could significantly affect your tax responsibilities.

With new regulations coming over the next few years—like mandatory reporting by all U.S. exchanges such as Coinbase and Kraken.

Handling crypto taxes is about to get even more complicated.

But don’t worry—there are ways to stay compliant and avoid costly penalties.

Here’s what you need to know about these changes, why they’re such a big deal, and how you can protect yourself with CryptoTaxAudit’s simple yet powerful strategy.

The Problem: Massive Disruption in Crypto Tax Reporting

Starting in 2025, the IRS’s new crypto tax regulations take effect, bringing the biggest shift in how crypto transactions are reported since 2014. Here’s what’s happening:

Exchanges will report your transactions directly to the IRS: Exchanges like Coinbase and Kraken will start issuing 1099-DA forms, reporting each of your sales or exchanges to the IRS.
Mandatory cost-basis tracking: Taxpayers must use a First-In-First-Out (FIFO) tracking method by wallet, a major change from the more flexible options previously available.
Complexity in preparing crypto gains calculations: Reconciling the new data will add significant complexity, especially for those who use multiple wallets or exchanges.

Starting in 2026, exchanges will begin reporting not only your sales but also your wallet addresses and transaction details.

This will make it much easier for the IRS to detect unreported crypto income and will increase the risk for those who don’t stay compliant.

The clock is ticking. The deadline for adopting a safe harbor allocation plan—which can protect you from costly mistakes and penalties—is December 31, 2024.

The Solution: Adopt a Safe Harbor Allocation Plan

The IRS is allowing taxpayers to adopt a safe harbor allocation plan to avoid being taxed too much or facing penalties.

This plan lets you organize how you track the cost basis of your digital assets, ensuring that you don’t overpay in taxes or get caught off-guard by the new rules.

The good news? We’ve got you covered.

At CryptoTaxAudit, we’ve developed a free, IRS-compliant safe harbor allocation plan that you can easily adopt.

This plan ensures that all of your transactions are recorded properly, and your tax calculations are accurate.

Here’s what it does:

Creates a date-stamped, signed document for your records: This proves that you’ve complied with IRS regulations.
Gives you peace of mind: You’ll be prepared when the new IRS rules take effect in 2025 and beyond.
Protects you from penalties: If you fail to adopt a plan by December 31, 2024, the IRS will use the FIFO-by-account method by default, which could result in a larger tax bill.

How Easy Is It to Get Protected?

The process to adopt a safe harbor allocation plan begins at our dedicated page. Here’s a straightforward guide:

Visit Our Page: Start by going to our Safe Harbor Allocation Plan page.
Download Our Free Plan: We provide a pre-formatted allocation plan that meets all IRS requirements, and it can be downloaded directly from our site.
Adopt the Plan: Simply sign and date the document before December 31, 2024.
Keep it in Your Records: There’s no need to send it to the IRS unless they request it during an audit.

We’ve done all the hard work for you, so you can stay focused on your investments and avoid unnecessary tax headaches.

Why You Need to Do This Now

Waiting until the last minute is risky. The IRS’s new regulations will soon be in full effect, and the penalties for non-compliance are significant. Here’s why you need to act now:

Avoid overpaying in taxes: Without a safe harbor plan, the IRS will apply a default method that may not be favorable to you, leading to higher tax liabilities.
Reduce audit risk: By having a plan in place, you protect yourself from potential IRS scrutiny.
Stay prepared: As the IRS improves its methods for tracking crypto transactions, being proactive with your tax planning will help you stay ahead and avoid issues down the line.

The Bottom Line: Don’t Wait to Get Protected

With the IRS making these sweeping changes, the time to act is now. Don’t let the complexities of crypto taxes catch you off-guard. By adopting a safe harbor allocation plan, you’ll stay compliant, avoid penalties, and ensure that you’re not overpaying on your taxes.

At CryptoTaxAudit, we’re here to help. Download our free Safe Harbor Allocation Plan today and protect your assets before the December 31, 2024, deadline. Stay compliant. Stay protected.

Take Action Now! Click Here to Get Your Free Safe Harbor Allocation Plan