4 ms·

Happy to help in general terms here. Generally speaking, risk of audit and high fines and fees go up as the amounts you're dealing with go up. I don't know wha

Happy to help in general terms here. Generally speaking, risk of audit and high fines and fees go up as the amounts you're dealing with go up. I don't know what kinds of values we're dealing with with 40-100 trades, so I'll just give you broad strokes. Having an accountant or a tax attorney review your numbers will, in almost all cases, cost you less than $1,000. If you're talking about $2,000 in income/gains, then obviously that's a non-starter and I'd just go the route you're considering (SaaS), having done good due diligence on the service as you seem to have. If, however, you're looking at $100k in OI or capital gains, I'd say a 1% investment to not owe all of your back taxes + potentially 100% or more in fines in 5-7 years when, potentially, you don't even have that money anymore. As for your second question, I would just say there is no statute of limitations on undeclared income. The logic there is that you aren't incentivized to hide your income for 3 (or 7) years and then get off the hook, and it is difficult for the IRS or state taxing authorities to discover undeclared (as against under-declared) income -- i.e. how would they know about it? Thus, there is no amount of time that can pass such that you are truly free and clear. You can file amended returns for ordinary income you failed to declare with Form 1040X: https://www.irs.gov/pub/irs-pdf/f1040x.pdf https://www.irs.gov/pub/irs-pdf/f1040x.pdf

joshstrange 5y ago
Thank you for response, I really appreciate it. I’ll take a look at that form and get it filed out, I have no intention of hiding anything, I just didn’t know any better back in 2014. As of now I’ve made zero trades but I want to pull out the max you can for long term capital gains without getting taxed by that ($40K) and I figured it’d probably spread out the cash-outs to even out the risk. I asked the person that manages my retirement fund about help with Crypto taxes and got the equivalent of a blank stare so I’ll probably need to look online for someone to hire since I don’t know how many people around me specialize in something like that. Thank you again for your feedback. EDIT: As shown in the replies below I misunderstood how long term capital gains were taxed. I though the brackets were based on how much you made off the trade, not based on your income. The $40K number I mention above doesn't have any significance for me in reality. If you make between $40K-$500K you pay 15% on long-term gains.
- tldrthelaw 5y ago
  Happy to help. Best of luck, you’ve got the right approach.
- FreakLegion 5y ago
  > I want to pull out the max you can for long term capital gains without getting taxed by that ($40K) Will this be your only income? If not, you'll still owe taxes. Capital gains aren't separate from the rest of your income; they're just taxed at different rates. If this will be your only income, don't forget about the standard deduction. That gives you another $12.4K toward the 0% long-term capital gains rate, so $52.4K total.
  - joshstrange 5y ago
    And this is why I need to just pay someone else to handle this for me. I've read a bunch on this but I was under the (mistaken) assumption that the brackets for capital gains taxes were based on how much you made in gains (ie. up to $40K in /gains/ is taxed at 0%). Ok, well that sucks a little bit but really what that means is I'm going to get taxed at 15%, I knew 0% was too good to be true, even for long term capital gains. EDIT: Thank you for calling that out, it will have saved me from an unpleasant surprise next April.

joshstrange 5y ago

Thank you for response, I really appreciate it. I’ll take a look at that form and get it filed out, I have no intention of hiding anything, I just didn’t know any better back in 2014. As of now I’ve made zero trades but I want to pull out the max you can for long term capital gains without getting taxed by that ($40K) and I figured it’d probably spread out the cash-outs to even out the risk. I asked the person that manages my retirement fund about help with Crypto taxes and got the equivalent of a blank stare so I’ll probably need to look online for someone to hire since I don’t know how many people around me specialize in something like that. Thank you again for your feedback. EDIT: As shown in the replies below I misunderstood how long term capital gains were taxed. I though the brackets were based on how much you made off the trade, not based on your income. The $40K number I mention above doesn't have any significance for me in reality. If you make between $40K-$500K you pay 15% on long-term gains.

tldrthelaw 5y ago
Happy to help. Best of luck, you’ve got the right approach.
FreakLegion 5y ago
> I want to pull out the max you can for long term capital gains without getting taxed by that ($40K) Will this be your only income? If not, you'll still owe taxes. Capital gains aren't separate from the rest of your income; they're just taxed at different rates. If this will be your only income, don't forget about the standard deduction. That gives you another $12.4K toward the 0% long-term capital gains rate, so $52.4K total.
- joshstrange 5y ago
  And this is why I need to just pay someone else to handle this for me. I've read a bunch on this but I was under the (mistaken) assumption that the brackets for capital gains taxes were based on how much you made in gains (ie. up to $40K in /gains/ is taxed at 0%). Ok, well that sucks a little bit but really what that means is I'm going to get taxed at 15%, I knew 0% was too good to be true, even for long term capital gains. EDIT: Thank you for calling that out, it will have saved me from an unpleasant surprise next April.