...but if you are a casual trader who, let's say, has less than $30k of tax obligations in a year, you are highly unlikely to be audited.
I don't live in the US, but I understand that this type of scenario might come up in our country as cryptocurrencies gain more popularity. The term "obligation" clearly implies that we, as taxpayers, need to ensure that we maintain proper records of our trading activities. It's like we become business entities responsible for maintaining financial statements to determine our tax liabilities. I bet not all profitable crypto traders are really committed to reporting their tax obligations. Some might not even keep track of their trading transactions.
I'm curious about the consequences of failing to report. What kind of sanctions could we potentially face if the IRS decides to conduct a thorough audit?
If you are using exchanges that don't report to the IRS, then the activity on those exchanges may have well never existed at all...
Sure that's true, but are we gonna trust these exchanges?
BTW I'm not advocating that people cheat on their taxes, just relaying info from a knowledgeable source.
You know, there's this saying that goes, "It's only called cheating if you get caught." But if you can employ some accounting tricks that make your actions appear legally as "tax avoidance," then there's probably no risk involved.
