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I'm a bit late to this thread but just wanted to add that you should definitely keep detailed records of all your crypto transactions - purchase dates, sale dates, prices, fees, etc. The burden of proof is on you if questioned. I believe Binance only issues 1099-Bs for customers with transactions exceeding $20,000 or 200 transactions in a year. For smaller accounts, they often don't issue any tax forms at all, which is why you might not see anything on your transcript.
I've heard people recommend using crypto tax software that keeps track of your cost basis across different platforms. Do you think that's necessary, or is just keeping my own records in a spreadsheet good enough?
A spreadsheet can be sufficient if you're diligent and have relatively simple crypto activity. I started with spreadsheets myself. But they become cumbersome quickly, especially if you're dealing with multiple exchanges, token swaps, staking rewards, or DeFi transactions. The key advantage of specialized crypto tax software is that it handles complex situations like FIFO vs LIFO accounting methods, tracks cost basis across platforms, and automatically identifies which specific coins were sold from your holdings. The IRS allows different accounting methods, and your choice can significantly impact your tax liability, especially if you bought the same crypto at different price points.
Anyone tried FreeTaxUSA for reporting crypto? I've used them for years but never had to report crypto until now.
I used FreeTaxUSA for my crypto last year. They handle it pretty well! You'll need to enter each transaction manually on Form 8949, but the interface makes it straightforward. Just make sure you've calculated your cost basis correctly beforehand. If you have tons of transactions, it can get tedious, but for a reasonable number it works great.
Anybody know why there's such a big gap between when they "process" your return and when they actually send the money? Seems like once they approve it they could just send the refund immediately. Mine was processed on 2/9 but refund date shows 2/21...that's ridiculous.
Pro tip: If you have the 846 code on your transcript with a specific date, that's your ACTUAL refund date. That's the date they send the payment to your bank. Then it usually takes 1-2 business days for your bank to post it. But the IRS doesn't always hit that exact date - sometimes it comes a day or two early. The processing date is different from the refund issued date.
I see a code 570 on mine. What does that mean? My tax guy says everything is fine but it's been 5 weeks...
Don't forget to consider state tax implications of the switch! Depending on your state, there can be significant differences in how S Corps vs C Corps are taxed at the state level. For example, in California, S Corps pay a 1.5% tax on net income (minimum $800), which is different from the C Corp rate. Some states don't recognize S Corps at all for state tax purposes!
This is such an important point. I'm in New York and was surprised to learn they have an additional tax for S corporations that I wasn't expecting. Always research your specific state requirements before making the switch.
The timing of when you make the conversion matters a lot. If your business has significant assets that have appreciated in value (like real estate, equipment, intellectual property), converting can trigger a tax on that appreciation. If your business is mainly service-based with minimal assets, this is less of a concern. But if you do have valuable assets, consider getting them properly valued before making any decisions.
Quick tip from someone who went through this exact scenario two years ago: gather proof of where you WERE during the time the IRS claims you were working at this company. I was a student too, and I provided: 1. My class schedule from that semester 2. My student ID swipe records showing I was on campus 3. My part-time job timesheets from the campus library 4. Bank statements showing regular withdrawals near campus (not near the supposed employer) The IRS attorney took one look at this package and realized it would be impossible for me to have worked full-time at the company in question. We settled before ever going to court. Also, call the SSA and request a wage and income transcript for that tax year. It might show who actually received the income (could be someone with a similar SSN to yours).
This is brilliant! I hadn't thought about proving where I actually was during that time. I can definitely get my class schedule, campus card swipes, and my work-study timesheets from the university admin office. Did you just compile all this into a packet? And did you send it to the IRS attorney directly or submit it through the Tax Court system?
I compiled everything into a single PDF with a cover page that had my name, tax ID (last 4 digits only), tax year, and case number. I included a simple timeline showing how my documented whereabouts made it impossible for me to have worked at the company in question. I actually did both - I submitted it formally through the Tax Court DAWSON system AND sent a courtesy copy directly to the IRS attorney once they were assigned to my case. The direct approach with the attorney was what moved things along quickly. They appreciate organized evidence that makes their job easier. When the IRS attorney contacts you (they will), be polite and professional but also very clear about your evidence. They're often reasonable people who don't want to waste court resources on cases they're likely to lose.
Just adding that I went through something like this and learned identity theft might be involved. Request an Identity Protection PIN from the IRS at https://www.irs.gov/identity-theft-fraud-scams/get-an-identity-protection-pin Also, check your credit report immediately. Someone might have used your SSN for employment and that could appear there. The company not existing anymore is actually common in these scams. Sometimes "companies" are created just to file fake W-2s and then disappear. Make sure you mention this suspicion in your court documents.
This happened to my roommate! He had a CP3219A for income from a "consulting company" that had dissolved. Turned out someone had used his SSN for employment. The red flag was that the company was in Nevada, but he'd never even been to Nevada. OP should definitely check if the company was in a location that doesn't make sense for a college student. That strengthens the identity theft argument.
Oliver Becker
Don't forget about the AMT implications with ISOs! Even if you have a disqualifying disposition, you might still need to figure out if you paid any AMT in the year you exercised. If you did, you might be eligible for an AMT credit. The whole ISO system is ridiculously complicated. When I exercised some ISOs in 2022, I had to pay AMT that year. Then when I sold in 2023 (disqualifying disposition), I got ordinary income but was also eligible for an AMT credit. Make sure you're tracking all this stuff.
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Miguel Alvarez
ā¢I'm honestly not even sure if I paid AMT when I exercised these. How would I know? Would it have been obvious on my 2023 return or is this something that could have happened without me realizing it?
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Oliver Becker
ā¢Check your 2023 tax return for Form 6251 (Alternative Minimum Tax). If you paid AMT, it would show up there and on line 1 of Schedule 2 of your Form 1040. If you did pay AMT in 2023 when you exercised, you'll likely be eligible for an AMT credit on your 2025 return (for the 2024 tax year when you sold). You'll need to file Form 8801 (Credit for Prior Year Minimum Tax) along with your return. This credit can potentially offset some of the tax impact from your disqualifying disposition.
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Natasha Petrova
Something else to consider with ISOs - if your company is private or was private when you exercised, the calculation of the bargain element can get really messy. Companies use 409A valuations which might not match what you think the shares are worth. My company went public 8 months after I exercised some ISOs and the 409A value at exercise ($12/share) was WAY lower than the IPO price ($47/share). I made a disqualifying disposition but the bargain element was calculated based on the lower 409A value, not the public market value when I sold.
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Javier Hernandez
ā¢Yep, this happened at my last job too. But be careful - some companies mess up the reporting on disqualifying dispositions. My employer reported the wrong amount on my W-2 (they used the sale price instead of FMV at exercise for calculating the ordinary income). Had to get an amended W-2 which was a huge hassle. Double-check your W-2 when you get it!
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