Do I need to report all crypto purchases on my taxes or only transactions over a certain dollar threshold?

Wait, so if I bought $10,000 worth of Bitcoin last year but didn't sell any, I don't need to report anything? That seems too good to be true. Don't they ask about crypto on the 1040 form somewhere?

You're right that there is a question about crypto on Form 1040 - it asks if you received, sold, exchanged, or otherwise disposed of any financial interest in virtual currency. If you only purchased crypto with USD and held it, technically you can answer "no" to this question, as purchasing alone isn't considered a taxable event. For your situation with $10,000 in Bitcoin purchases without any sales, you wouldn't have any taxable events to report on your tax forms. However, you should still keep detailed records of all purchases (dates, amounts, cost basis) for when you eventually do sell or exchange that Bitcoin in the future.

Does it work with smaller exchanges too? I use Coinbase but also have some stuff on KuCoin and a couple other platforms. Can it handle DeFi transactions or just the major exchanges?

How secure is it though? I'm always nervous about connecting my exchange accounts to third-party services. Have you had any issues with that? And can it handle staking rewards reporting too?

It works with pretty much all the major exchanges plus a bunch of smaller ones too. I used it with Coinbase, Binance, and KuCoin without any issues. They have a growing list of supported platforms that includes most of the popular exchanges. Security-wise, I was hesitant at first too, but they use read-only API connections so they can't actually move your crypto or make any changes to your accounts. Alternatively, you can just download transaction CSVs from your exchanges and upload those if you prefer not to connect directly. And yes, it handles staking rewards correctly - categorizes them as income at fair market value when received, which is what the IRS looks for.

I'm confused... what exactly is this service? Are they just calling the IRS for you? How would that be any different than me calling myself? Is this even legit?

Sorry but this sounds like BS. There's no way to "skip the line" with the IRS. They're notoriously understaffed and everyone has to wait. How would this random service magically get through when millions of people can't?

It's not actually "calling for you" - it's a service that navigates the IRS phone tree and waits on hold for you. When they reach a live agent, you get a call back so you can talk directly to the IRS yourself. You don't have to sit through the hold time, which has been 2+ hours during busy periods. I was skeptical too! But it's basically using technology to handle the waiting part. Think of it like having someone wait in a physical line for you, then texting when they're near the front so you can take their place. The IRS has no idea you used the service - they just know someone waited on hold and then you're the one who talks to them. I saved literally hours of my life not listening to that horrible hold music.

But those reports aren't always 100% accurate, right? I've heard horror stories about exchange reports missing transactions or calculating cost basis incorrectly, especially if you've moved crypto between different platforms.

You make a good point - exchange reports are helpful but not perfect. They can only report on transactions that happened on their platform, so if you've moved crypto between exchanges or wallets, their reports won't have the complete picture of your cost basis. This is particularly problematic when you've bought on one exchange and sold on another - neither exchange has the full information needed to calculate your gain/loss correctly. That's why many people end up using specialized crypto tax software to consolidate everything across multiple platforms for a complete and accurate tax report.

Mining rewards are treated as income at the fair market value of the crypto on the day you received it. So if you mined 0.1 ETH when ETH was worth $2,000, you'd report $200 of income. Then that $200 becomes your cost basis for that 0.1 ETH. When you eventually sell it, you'll calculate capital gains/losses based on that $200 cost basis, not what you might have paid to buy similar amounts of ETH.

This is such great advice! I wish someone had told me this when I first started buying crypto. I'm pretty new to all this and have been super sloppy with my record keeping. Started buying small amounts of Bitcoin and Dogecoin a few months ago but honestly haven't been tracking much beyond what shows up in my Robinhood account. Reading through this thread is making me realize I need to get organized NOW before things get even more complicated. Do you recommend any specific apps or spreadsheet templates for tracking this stuff? I'm not very tech-savvy but want to make sure I'm prepared when tax time comes around.