I'm a Cryptocurrency Tax Specialist for the 2025 Filing Season - Ask Me Anything!

Thanks for this! What about NFTs? I bought some last year and sold them at a loss (ugh). Do I report those the same way as regular crypto? And does the wash sale rule apply if I rebought similar NFTs after selling?

NFTs are also treated as property for tax purposes, so you'll report them similarly to other crypto assets. Your losses are generally deductible against other capital gains, and if your losses exceed your gains, you can deduct up to $3,000 against ordinary income. Currently, the wash sale rule that prohibits claiming losses when you buy substantially identical securities within 30 days before or after a sale technically doesn't apply to crypto or NFTs. However, there's proposed legislation that could change this in the future, so I'd recommend documenting your transactions carefully.

Does it handle those weird situations where you provide liquidity to pools? I've got a ton of transactions from yield farming that I have no idea how to report properly.

I'm skeptical about these crypto tax tools. How accurate is it really with DeFi? I tried another service last year and they completely messed up my Uniswap transactions and categorized everything wrong.

It definitely handles liquidity pools - that was actually one of my biggest headaches that they solved. You connect your wallets and it automatically identifies LP deposits/withdrawals and calculates the impermanent loss correctly. For DeFi accuracy, that's exactly why I switched. My previous service kept categorizing my token swaps as income instead of trades. Taxr.ai correctly identified all my Uniswap and Curve transactions, even the complex ones where I was doing multiple swaps in a single transaction. They also have a manual review option where specialists check your unusual transactions if something looks off.

How does this actually work? I'm confused about how a third-party service can get you through to the IRS faster than calling directly? Sounds too good to be true.

Yeah right. The IRS phone system is deliberately designed to be impossible. No way this actually works - they're probably just taking your money and you got lucky with the timing.

It uses an automated system that continually calls the IRS until it finds an open line, then connects you immediately when it gets through. It's like having a robot assistant keep redialing so you don't have to waste your whole day trying. They actually don't take your money until after you're connected, so there's no risk of paying and not getting through. It saved me at least 5-6 hours of frustration. The IRS agent I spoke with was able to help resolve my crypto reporting issue right on the call.

Not the specialist, but I dealt with this last year. Pretty sure the gift isn't taxable for the recipient until they sell. But the gifter might have gift tax implications if it's over the annual exclusion amount (which I think is like $18k per person now).

When you gift cryptocurrency, you don't trigger an immediate tax event for yourself (the giver) or your nephew (the recipient). However, there are a few important considerations: If your gift exceeds the annual gift tax exclusion amount ($17,000 per recipient for 2024, and likely higher for 2025), you would need to file a gift tax return (Form 709). This doesn't necessarily mean you'll pay gift tax, as it would just count against your lifetime estate and gift tax exemption. The most important aspect is that your nephew inherits your cost basis and holding period. This means when he eventually sells the Bitcoin, he'll calculate his gain or loss based on what you originally paid for it, not the $550 value when you gifted it. Make sure to provide him with documentation of when you acquired the Bitcoin and what you paid for it.

The IRS doesn't have a specific crypto voluntary disclosure program like they do for offshore accounts. Your best bet is probably to file amended returns (Form 1040-X) for those years. I did this last year for some missed 2020 transactions and just had to pay the tax plus interest, no penalties.