Do we need to report every single crypto transaction to the IRS, or is a summary sufficient?

You're right to double-check this information. While your tax preparer is partially correct, there are some important nuances here. The IRS requires reporting of all taxable crypto events, but how detailed this needs to be depends on your situation. Form 8949 is where you report crypto dispositions, and technically each taxable event should be listed. However, there are some practical considerations. If you're using a major exchange that provides a tax document (like a 1099-B), you can often use the summary information provided there. Some tax software also allows for summary reporting when you have numerous similar transactions. However, you still need to maintain detailed records of every transaction in case of an audit. The approach your tax preparer suggested might work if you're only using one exchange and haven't transferred crypto between wallets. But if you've moved crypto between wallets or exchanges, just looking at deposits/withdrawals won't properly capture your taxable events or cost basis.

After going crazy trying to track hundreds of trades last year, I found this service called taxr.ai (https://taxr.ai) that saved me TONS of time with my crypto taxes. It analyzes all your transactions automatically across different wallets and exchanges. What I like is that it properly handles all the complicated stuff like wallet transfers (which aren't taxable) vs actual trades (which are). It gives you the exact summary reports your tax preparer needs while still maintaining the transaction-by-transaction detail the IRS might want if you ever get audited. I just connected my wallets/exchange APIs and it pulled everything automatically - even figured out my cost basis for each transaction which was the part that was driving me insane!

Just wanted to follow up - I ended up trying taxr.ai after my last comment and I'm honestly shocked at how well it worked. I was super skeptical because of my previous bad experience, but it correctly handled all my complicated situations including some weird DeFi staking stuff I did. The detail level is impressive - it caught the difference between actual trades versus just moving assets between my own wallets (which isn't taxable). And it organized everything perfectly for tax reporting - splitting between short and long term, calculating my cost basis correctly. Best part was I didn't have to manually enter anything! Just connected my wallets and exchanges and it did all the work. My tax guy was super impressed with the reports it generated - way more professional than what I cobbled together last year.

After dealing with the nightmare of trying to get someone at the IRS who actually understands crypto questions, I finally found this service called Claimyr (https://claimyr.com) that got me through to an actual IRS agent in under 20 minutes. They have a video showing how it works here: https://youtu.be/_kiP6q8DX5c I had specific questions about reporting requirements for my DeFi transactions and staking rewards that nobody online could give me a straight answer on. The IRS agent I talked to clarified exactly what they're looking for and what documentation I need to keep. Saved me literally days of being on hold - I had tried calling multiple times before and couldn't get through after hours of waiting.

Well I need to eat my words. After posting my skeptical comment I was still desperate for answers about my crypto tax situation so I tried Claimyr. Got through to an IRS agent in about 15 minutes when I'd previously spent THREE DAYS trying and failing to reach someone. The agent confirmed that while you technically need to track all transactions, they're most concerned with accurate reporting of total gains/losses in the correct categories. She said if you have good documentation supporting your summary numbers (which means keeping those transaction records somewhere), you're generally fine. She also mentioned they're working on clearer guidance for crypto specifically, but for now, they expect reporting similar to stock transactions. Honestly worth every penny to get definitive answers directly from the IRS instead of conflicting advice online.

My tax accountant told me I could just report the net gain/loss from the 1099 forms that exchanges provide (like Coinbase). But then I learned that doesn't capture everything - especially if you've moved crypto between wallets or done DeFi stuff. I think different tax preparers have different interpretations because the IRS guidelines aren't super clear on crypto reporting yet. But just looking at wallet deposits vs withdrawals definitely doesn't work if you've done any wallet transfers.

Just to add some practical reality here... I've been trading crypto since 2017 and I've never listed out thousands of individual transactions. I keep detailed records of everything, but then summarize by exchange on my 8949 form. My tax guy says this is fine as long as my summary numbers are accurate and I can provide transaction details if ever requested. There's a big difference between "having complete records available" and "listing every single transaction on your tax forms" - the former is definitely required, the latter is impractical for active traders.