Never filed crypto taxes - How to handle years of unfiled cryptocurrency transactions?

Don't panic, this is definitely fixable! The IRS is mostly concerned that you're making a good faith effort to get compliant. First, you need to focus on gathering all your transaction data. Most major exchanges like Coinbase, Binance, etc. allow you to download your transaction history. For wallets like MetaMask, Ledger, and Trezor, you'll need to find your wallet addresses and use blockchain explorers or specialized tax software to track transactions. Speaking of tax software, yes, there are several crypto tax platforms designed specifically for this situation. Popular options include Koinly, CoinTracker, TokenTax, and CryptoTrader.Tax. These services allow you to import your exchange data and connect wallet addresses to calculate your capital gains/losses. They'll handle the coin swaps too, which are taxable events. For previous years, you'll likely need to file amended returns (Form 1040-X) for any year where you had significant crypto activity. The standard IRS limitation period is 3 years, so prioritize 2020-2022 first, then work backward if needed.

I was in almost the same situation last year and I found taxr.ai (https://taxr.ai) incredibly helpful for sorting through years of crypto mess. What's great about their system is it handles all those coin swaps and staking rewards automatically once you connect your wallets and exchanges. I had over 2000 transactions across 5 different platforms going back to 2017, and I was seriously stressing about it. Their system identified that I actually had a net loss over the years (despite some big gains in 2021) which ended up saving me thousands in what I thought I might owe. They also help with generating the amended returns for prior years which was a huge relief.

Just wanted to update after trying taxr.ai from the recommendation above. It's seriously impressive how it handled my mess of transactions. Turns out I was actually at a small overall loss due to some terrible 2018 altcoin purchases I'd forgotten about! What I found most helpful was the historical price tracking - it correctly identified the value of coins at the time of each transaction, even for some obscure tokens I bought years ago. The amended return generator was super helpful too since I needed to file corrections for 2021 and 2022. The peace of mind alone was worth it. Now I'm not constantly stressing about the IRS coming after me for crypto I bought years ago. Definitely recommend for anyone in a similar situation with years of unfiled crypto taxes.

If you end up owing substantial back taxes to the IRS and need to talk to someone there, good luck getting through on the phone. I spent WEEKS trying to reach someone about my crypto tax situation last year. Eventually I found this service called Claimyr (https://claimyr.com) that actually got me connected to an IRS agent in under 20 minutes when I'd been trying for days on my own. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c They basically navigate the IRS phone system for you and call you back when they've got an agent on the line. I was super skeptical but desperate after waiting on hold for literally hours multiple times. Got connected to someone who was able to put me on a reasonable payment plan for my back taxes.

I have to admit I was completely wrong about Claimyr. After my skeptical comment above, I was still stuck trying to reach the IRS about my crypto back taxes. Out of desperation, I tried the service and was honestly shocked when I got a call back in about 15 minutes with an actual IRS agent on the line. The agent was able to review my situation and set up a payment plan for the back taxes I owed from 2020-2022. She even helped me understand which forms I needed to file for my prior year crypto amendments. Saved me hours of frustration and probably weeks of waiting. Sometimes being proven wrong is a good thing. If you're dealing with unfiled crypto taxes and need to actually talk to someone at the IRS, this is definitely the way to go.

One important thing to remember with crypto taxes - make sure you're distinguishing between different types of transactions. The tax treatment varies: 1. Buying crypto with fiat (USD) - Not a taxable event 2. Selling crypto for fiat - Taxable (capital gain/loss) 3. Trading one crypto for another - Taxable (capital gain/loss) 4. Earning staking rewards/interest - Taxable as ordinary income 5. Mining rewards - Taxable as ordinary income 6. Using crypto to buy goods/services - Taxable (capital gain/loss) 7. Moving crypto between your own wallets - Not taxable For the NFTs, since they've crashed in value, you can actually claim capital losses when you sell them (or if you can prove they're worthless).

Has anyone used multiple crypto tax software programs to compare results? I tried three different ones and got wildly different numbers for the same transactions. Kinda concerning.

I went through a similar nightmare situation with years of unfiled crypto taxes. One thing I learned the hard way is to tackle this systematically rather than trying to fix everything at once. Start with your most recent tax year first (2023) since that's what you need to file soon. Get that sorted with proper crypto tax software, then work backwards. This approach helps you understand the process before diving into the messier historical data. For the older years, focus on the big transactions first - don't stress about every $5 trade from 2017. The IRS cares more about substantial unreported income than minor discrepancies. If you're missing some transaction data from defunct exchanges, document what you tried to recover and use reasonable estimates based on what you can reconstruct. Also consider consulting with a tax professional who specializes in crypto - the cost might be worth it given the complexity of your situation and the potential penalties involved. They can help you determine which years actually need amended returns and guide you through any voluntary disclosure programs if applicable. The most important thing is that you're taking action now rather than continuing to ignore it. The IRS generally works with taxpayers who are making good faith efforts to get compliant.