Question about crypto tax reporting software - has anyone used TaxBit, CoinTracker, or Koinly for situations like this? I'm dealing with something similar from 2022 trades but have about 300+ transactions. Not looking forward to entering all that manually.

This is exactly why crypto tax situations can be so confusing! The IRS automated systems just see the gross transaction amounts from exchanges without the context of your actual cost basis. It's really common for people to get these notices even when they had losses. I'm glad to see from your update that everything got resolved! For anyone else dealing with similar issues, the key is having good documentation of your actual transactions showing the purchase prices, sale prices, and dates. The 1099 forms from exchanges often don't tell the complete story. One thing I learned from my own crypto tax issues is that it's worth reporting losses even if you think you don't need to - they can actually be beneficial for offsetting other gains or reducing ordinary income up to $3,000 per year. Plus it prevents these kinds of automated notices from the IRS in the first place.

Has anyone here used TurboTax for fixing crypto reporting issues like this? I'm in a similar situation but wondering if regular tax software can handle the amendment or if I need something more specialized?

This exact thing happened to my brother last year! The IRS was claiming he owed $18k on crypto trades when he actually lost about $500. The root issue is that Webull (and most crypto exchanges) only report your sales to the IRS via 1099-B forms, but they don't include what you originally paid for the crypto. So the IRS computer systems automatically assume you got all your crypto for free, making every sale look like 100% profit. Here's what worked for him: 1. Downloaded his complete transaction history from Webull 2. Created a detailed spreadsheet matching every buy with every sell 3. Filed Form 1040-X (amended return) with a complete Form 8949 showing actual cost basis 4. Wrote a clear cover letter explaining the error and referencing the notice number The whole mess got resolved in about 8 weeks, and he ended up owing nothing since he actually had a net loss. Still had to pay a small penalty for not reporting initially, but it was like $150 instead of the thousands they were demanding. Don't panic - this is fixable! Just make sure you respond before the deadline in their letter.

I just want to point out that even though you had minimal profit/loss, you still legally needed to report every transaction. The IRS considers each crypto sale a taxable event regardless of whether you made or lost money. My brother thought the same way - "why report if I basically broke even?" - and ended up with a much worse situation when they came after him 3 years later with compounded penalties. Don't mess around with the IRS - they have unlimited time and resources to come after you.

I went through almost exactly this situation in 2020! The panic you're feeling is totally understandable, but this is actually a pretty common issue that the IRS deals with regularly. First thing - don't ignore that letter. The 30-day response window is real, but the IRS is generally reasonable when you're being proactive about fixing genuine mistakes. Since you mentioned you basically broke even or had a small loss, you'll want to gather all your transaction records from the trading platform. Most apps let you download a complete transaction history even from years back. You'll need this to calculate your actual cost basis for each trade. The key forms you'll need are Form 8949 (to report each crypto transaction) and Form 1040-X (amended return) for 2019. When you show the IRS your actual cost basis, it should demonstrate that you didn't have the massive gains they're assuming. Pro tip: Include a brief letter explaining this was an honest oversight on your first time dealing with crypto taxes. The IRS often shows leniency on penalties for first-time mistakes, especially when there's minimal or no actual tax owed. You've got this - it's way more fixable than it feels right now!

Just wanna ask - what tax software are you using? I tried claiming standard deduction as a nonresident on TurboTax but it wouldn't let me because the software wasn't programmed to handle treaty exceptions properly! Had to switch to Sprintax which is designed for international students.

I've been dealing with similar tax software issues as an international student from Canada. After trying multiple programs, I found that FreeTaxUSA actually handles treaty benefits pretty well for nonresidents. It lets you manually override certain fields and has a section specifically for treaty-based positions where you can claim the standard deduction. The key is to file Form 8833 (Treaty-Based Return Position Disclosure) along with your 1040NR when claiming treaty benefits like the standard deduction. Most tax software won't automatically generate this form, so you might need to prepare it separately and attach it to your return. Regarding your original EITC question - I agree with the other commenters that it's unfortunately not available to nonresidents even with treaty benefits. I learned this the hard way when I tried claiming it two years ago and got the same CP11 notice that Freya mentioned. The IRS was actually pretty clear in their explanation that refundable credits have separate statutory requirements beyond what treaties can override. One thing I'd recommend is keeping detailed records of your treaty position claims in case the IRS has questions later. I keep copies of the relevant treaty articles and IRS publications that support my deductions.

Could this actually be a good thing in disguise? When I faced a similar situation, I initially panicked, but it turned out to be beneficial. The review process forced my employer to correct their reporting, which revealed they had actually underreported my wages. My refund ended up being larger than I had initially calculated. Isn't it better to have this caught now rather than years later when an audit might be more complicated?

I'm dealing with something similar right now and this thread has been incredibly helpful! My situation is a bit different though - I received my W-2 from my employer on time, but when I checked my wage and income transcript online, it shows no wage information reported for 2024. I filed my return in early February and got the dreaded CP05 notice about the 120-day review. What's frustrating is that my employer insists they submitted everything correctly, but clearly something went wrong in the transmission to the SSA. Has anyone had success getting their employer to resubmit the wage information, or do you just have to wait it out? I'm wondering if there's a specific form or process employers need to follow for corrections, since my payroll department seems confused about what steps to take next. Also, for those who went through this - did you get any updates during the 120 days, or does the IRS just stay silent until they're ready to process?