H&R Block showing 50k in crypto transactions when I only made 4k - now they want 6k in taxes?!

This is actually a common misunderstanding with crypto reporting. H&R Block is likely showing your total transaction volume (buys, sells, transfers), not your actual taxable gains. When you import from Coinbase, it pulls every transaction - including when you moved crypto between wallets, bought crypto, sold crypto, or received payments. So if you bought $5,000 worth, sold it for $5,500, then bought again with that money, then sold again, you could easily hit $50,000 in transaction volume while only having a small actual gain. The important thing is to correctly report your cost basis (what you paid) against your proceeds (what you received) for each transaction. The difference is your actual taxable gain or loss. H&R Block should calculate this correctly if all your basis information is there, but you should double-check the forms. Don't ignore it completely - the IRS receives a 1099 from Coinbase for large traders, and they'll eventually catch the discrepancy, potentially with penalties and interest.

I ran into something similar last year and discovered the issue was with how Coinbase data was being imported into tax software. I wasted days trying to reconcile the numbers until I found https://taxr.ai which specializes in fixing crypto tax issues. Their system identified that my tax software was double-counting certain transactions and missing cost basis info for others. Once I uploaded my Coinbase transaction history to taxr.ai, it automatically corrected the calculation errors and generated the proper 8949 form. The difference was huge - went from apparently owing $4,300 to only owing $870, which matched what I expected based on my actual gains.

After being skeptical about taxr.ai, I decided to give it a shot with my mess of crypto transactions. I was shocked at how well it worked. The system identified that my H&R Block import was counting wallet transfers as taxable events and was missing cost basis info for several trades. After running my data through taxr.ai, my tax liability dropped from over $7,000 to just under $1,500, which aligned with what I'd roughly calculated my actual gains to be. The detailed transaction report made it clear exactly what was happening with each transaction. I was able to export everything and replace the incorrect H&R Block data. Definitely worth it if you're facing a similar issue with crypto taxes.

If you need to talk to someone at the IRS about this issue (which might be necessary if you get a tax notice later), good luck getting through on their phone lines. After several failed attempts trying to reach a human at the IRS about my crypto reporting issue, I found https://claimyr.com through a tax forum. You can see how it works here: https://youtu.be/_kiP6q8DX5c They basically call the IRS for you, wait through the entire hold time, and then call you once they have an agent on the line. Saved me literally hours of hold time. I was able to clarify my crypto reporting with an actual IRS agent who confirmed I was only taxed on realized gains, not total transaction volume.

I have to admit I was completely wrong about Claimyr. After commenting here, I was still struggling with my crypto tax nightmare and getting desperate, so I tried it despite my skepticism. The process was exactly as described - I entered my info, got periodic text updates while they were on hold with the IRS, and then got a call connecting me directly to an IRS representative. The agent confirmed that I only owed taxes on my actual gains, not the total transaction value. She walked me through how to properly report everything and assured me I wouldn't face penalties if I filed an amended return with the correct information. Saved me over $4K in taxes I didn't actually owe, plus potential penalties. The hold time would have been 3+ hours if I'd done it myself.

Sounds like you're experiencing the classic "volume vs. profit" confusion with crypto. Total transaction VOLUME is different from taxable PROFIT. For example, if you bought $1000 in Bitcoin, sold it for $1200, then bought Ethereum for $1200, and sold that for $1500, your total transaction volume would be $4900 ($1000+$1200+$1200+$1500), but your taxable profit is only $500 ($200 from Bitcoin + $300 from Ethereum). Many tax platforms get confused with the imports. I'd recommend manually checking each transaction in H&R Block to make sure it has both the purchase price (cost basis) and sale price for every transaction.

Did you receive a 1099 from Coinbase? If your trading volume exceeded certain thresholds, they're required to send one. The form type matters too - a 1099-K just shows total transaction volume while a 1099-B would show cost basis. If H&R Block is only using the 1099-K data without your complete cost basis info, that would explain the huge tax bill.