What time zone determines the cutoff for the beginning/end of a tax year for 24/7 trading?

So does this mean I could technically do a trade while physically in Hawaii at like 11:59pm on Dec 31 (where I'd be 5 hours behind EST) and it would count for the previous tax year even though it's already the next year for most of the country? Does the IRS actually check this stuff or just go by whatever date shows on your statements?

Yes, if you're physically in Hawaii and execute a trade at 11:59 PM HST on December 31, that transaction would count for that tax year, even though it's already the next calendar year in most of the country. The IRS generally relies on the documentation you provide. Your trading records and statements are the primary evidence, so it's important that you have documentation showing when and where the transaction took place. Most platforms provide timestamps, but they might use UTC or another standardized time zone - you'd need to convert these to your local time zone for accurate reporting.

How does taxr.ai handle transactions if you're traveling? Like if I made trades while physically in different time zones during the last week of December? Does it track your location somehow or do you have to manually note where you were?

Does it work with all exchanges? I use some pretty obscure platforms for certain altcoins and most tax software can't import from them correctly. Also wondering how it handles DeFi transactions which don't always have clear timestamps?

For travelers, you'll need to indicate where you were physically located when making each trade - the system allows you to specify different time zones for different transactions rather than assuming all your activity happened in one place. This is really helpful if you're on the move during critical tax cutoff periods. For exchange compatibility, it handles all major exchanges plus most smaller ones too. I was surprised it could import from some of my more obscure platforms. For DeFi transactions, it has a special analysis tool that examines blockchain timestamps and converts them to your local time zone, though you may need to provide additional context for complex smart contract interactions.

Wait how is this even possible? I've tried calling the IRS like 5 times this month and couldn't get through. Is this some kind of paid service? How much does it cost? Seems like it would be cheaper to just ask my accountant but she's been useless with crypto questions.

This sounds super sketchy. Why would the IRS allow a third-party service to jump the queue? I've been calling them for weeks about an issue with my 2023 return and keep getting disconnected. If this actually works, it seems like it would be unfair to everyone else waiting their turn.

Yes, it's a paid service, but I'm not going to discuss pricing here - you can check their website for current rates. It was worth it to me because I needed an answer before filing my taxes and couldn't waste days trying to get through. They don't "jump the queue" - they actually wait on hold for you, then call you when they're about to connect with an agent. The system is completely legitimate and doesn't do anything improper. Think of it like having an assistant wait on hold for you. The IRS doesn't know or care who's waiting on the line, and when you get connected, you're the one speaking directly with the IRS agent. For complex tax questions like timing of crypto transactions, sometimes you need an official answer directly from the source.

Could you in theory have a VPN set to a different time zone and claim that's where you were? Or does the IRS have ways to verify your physical location when you made trades? Just curious - not planning to try anything sketchy!

Using a VPN wouldn't change your physical location - it would only mask your IP address. The tax rule is based on where you are physically located, not where your internet connection appears to be coming from. If you were audited, the IRS could request evidence of your location like travel records, receipts, cell phone GPS data, etc. While it's technically possible to gain some tax advantages by being in a different time zone during the year transition, the logistics and travel costs typically outweigh any potential tax benefits for most people. Plus, intentionally misrepresenting your location would constitute tax fraud, which carries serious penalties including potential criminal charges.

I've never been audited specifically about time zones, but I did have the IRS question some of my crypto transactions from 2022. They were more concerned with making sure I reported all transactions rather than the exact timing of them. But if you had a really large gain or loss right at year end, I could see them being pickier about exactly which year it belongs in.

Thanks for sharing your experience. That's kind of what I figured - they're probably more focused on making sure all transactions are reported rather than nitpicking about exactly which tax year a midnight transaction falls into. Still, I think I'll be more careful with my record-keeping this year just to be safe.