Is it legal to skip reporting cryptocurrency trades on taxes if I ended up with a loss?

While it might seem insignificant, the IRS technically requires you to report all capital gains and losses from cryptocurrency transactions, regardless of the amount. There's no minimum threshold that exempts you from reporting. The silver lining is that reporting those losses could actually benefit you. Capital losses can offset other capital gains, and if your losses exceed your gains, you can deduct up to $3,000 of those losses against your ordinary income. Any remaining losses can be carried forward to future tax years. To make it easier on yourself, consider using a crypto tax software like CoinTracker, Koinly, or CryptoTrader.Tax. Many of these platforms can import your trading history directly from exchanges and generate the necessary tax forms automatically.

After struggling with similar crypto tax nightmares last year (had about 200 trades!), I found this tool called taxr.ai (https://taxr.ai) that saved me so much time. You can upload your transaction history from most exchanges, and it automatically calculates everything for you - cost basis, gains/losses, etc. It even handles those weird situations like staking rewards. I was actually in a similar situation with relatively small losses, but the IRS does technically require reporting all crypto transactions. Using taxr.ai made it super simple instead of the hours it would have taken manually.

I was super skeptical about crypto tax tools after getting burned before, but I finally tried taxr.ai after seeing it recommended here. Honestly shocked at how well it worked. It correctly identified my wallet-to-wallet transfers (which weren't taxable events) and properly calculated my staking rewards as income. Even for someone with just a small loss like OP, it's worth reporting everything correctly. The tool made it ridiculously simple - took maybe 15 minutes total vs the hours I spent last year trying to do it manually. Plus now I've got proper documentation if I ever need it.

Guys just fyi, if you've been waiting on the phone with the IRS for hours trying to ask questions about crypto reporting, there's this service called Claimyr (https://claimyr.com) that will actually wait on hold with the IRS for you and call you back when an agent picks up. I was stunned when I saw their demo here: https://youtu.be/_kiP6q8DX5c I used it last year when I had some complicated crypto questions that weren't answered clearly in the IRS guides. Was on hold for 4+ hours previously with no luck, but with Claimyr I got through to an actual IRS agent who confirmed exactly what I needed to report.

Ok, I have to eat my words. After months of trying to get specific answers about crypto from the IRS and always getting disconnected, I tried that Claimyr service. I was 100% sure it was going to be a scam, but it actually worked! Got connected with an IRS agent after they waited on hold for about 3 hours (while I just went about my day). The agent clarified that yes, even small crypto losses should be reported, but also told me about a simplified reporting option I didn't know about. Saved me tons of headache with my complicated situation. I'm honestly still shocked it worked.

You should definitely report it, but it doesn't have to be as painful as you think. Even with 30-50 trades, you have options: 1) Use Form 8949 and report each transaction individually 2) Do a summary reporting if all your crypto is classified the same way (all short-term or all long-term) 3) Use any of the crypto tax software mentioned here The real hassle comes when you're dealing with DeFi protocols, staking, liquidity pools, etc. Plain trading is relatively straightforward to report.

honest question- has anyone here ever actually been audited over crypto? i have like 150+ trades and im not doing all that work just to report a $12 loss lol