Should I Report Crypto Losses?

First, it's important to know that the IRS classifies cryptocurrency as a capital asset and every taxable event must be reported on an IRS 8949 cryptocurrency tax form, including your crypto losses.

What happens if you don't report cryptocurrency?

The IRS can go back up to three years to prosecute cases of tax evasion, and in cases where they find substantial error, they can decide to go back up to six years or more. ... If you were buying and selling cryptocurrency at any point in the past few years, you need to report these transactions on your annual tax return.

Do you have to report investment losses?

Obviously, you don't pay taxes on stock losses, but you do have to report all stock transactions, both losses and gains, on IRS Form 8949. Failure to include transactions, even if they were losses, would raise concerns with the IRS.