FAQs

How can I add or change the services I receive?

Of course, we can make appropriate changes at your request. Simply respond to us by email to schedule a complimentary call to discuss.

Can you help me understand the services listed on my CryptoTaxAudit invoice?

Yes, we are pleased to review our proposed or invoiced services with you in a complimentary call.

Does CryptoTaxAudit keep my data secure and confidential?

Yes, security is of utmost importance to us. We use enterprise-grade applications and implement security policies that significantly exceed IRS data protection standards. We use secure identity verification processes to prevent imposters from masquerading as you. We restrict staff to data on a need-to-know basis. And we have significant network and data access control and encryption procedures. Also, all personal data is kept in encrypted storage.

Can you help me if the IRS letter I received isn't about crypto?

Audit Defense is designed specifically for crypto traders and investors who are U.S. taxpayers, living in the United States or worldwide. However, we realize that sometimes the IRS may send you a letter that is not directly related to cryptocurrencies. As a member, you are welcome to schedule a private consultation where we can review your situation and advise you appropriately.

What is excluded from my Audit Defense membership?

Audit Defense includes virtually everything you need for an effective defense against the IRS. However, there are other types of audits for which we do not engage. For example, we do not defend you against audits conducted by state tax authorities, we do not represent Audit Defense members in a district or other court (except for U.S. Tax Court for plans that include this benefit), and we do not provide services not explicitly included in our Audit Defense plans. If you need assistance with one of these other services, contact us for a complimentary call to discuss your options.

How to I get started with Audit Defense?

It's easy. Select the plan that best meets your needs and purchase the plan online. You will be directed to the onboarding steps and receive a confirmation email shortly thereafter. Once we receive your onboarding authorization, we will access your IRS records and let you know what's happening in your account, usually within 30 to 45 days.

What years are covered by Audit Defense membership?

Audit Defense membership plans cover you, to the extent of your selected plan, for every year the IRS chooses to audit. As for monitoring, our service looks back to the year 2000 and alerts you if the IRS chooses to audit a past tax year.

Do all Audit Defense membership plans defend me in an IRS audit?

Audit Defense membership is offered at different plans to meet the needs of every crypto trader and every budget. However, not every plan protects you during an IRS audit. Our most comprehensive plan is called Full Protection and provides monitoring, advisory, representation, and defense benefits. Each subsequent plan eliminates one or more of these categories of protection. If you were to be audited and have a plan other than Full Protection, we would let you know the cost to provide those additional services, if needed.

Will having an Audit Defense membership make me more likely to be audited?

No, it doesn't make you more likely to be selected for an IRS audit. When you complete the onboarding steps, you sign IRS Form 2848 "Declaration of Representative". If the IRS targeted taxpayers who chose to hire representation, that would constitute an abuse of the Taxpayer's Right to Representation which the IRS Commissioner requires all employees to respect per tax code section 7803(a)(3).

What if I wait to purchase Audit Defense until after I receive an IRS audit letter?

You wouldn't buy insurance after crashing your car and expect them to pay for the damage. Similarly, purchasing Audit Defense after you receive an audit or examination letter reduces the benefits you are entitled to receive. Our team checks your IRS record to see if the audit would have been known before becoming a member, and if so, we will need to charge you a retainer if you would like us to defend you. We can still help, but it will cost you more out-of-pocket.

Should I wait to purchase an Audit Defense membership until after my tax return is filed?

No, there's no need to wait. Every day you are unprotected is another day closer to a potential IRS audit. If you are audited, Audit Defense membership plans provide various levels of protection including advisory services, IRS representation, and legal defense, depending on the plan you select.

What happens after I purchase an Audit Defense membership?

After you purchase an Audit Defense membership plan, you will be directed to the onboarding steps. For your security, these steps are required to properly authenticate you and receive your authorization to access your IRS account (Form 2848 "Declaration of Representative"). The process takes several minutes to complete and can be done immediately following signup, or within the next day or two.

Can you help me fix past tax returns where my crypto gains were not correctly reported?

Yes, we can help. Our first step is to review your IRS account transcripts and perform an initial risk analysis. From there, we can better advise you on how to proceed. Amending your tax returns is not always the best strategy, as this can increase your chances of an IRS audit if not done properly. Become an Audit Defense member so we can access your IRS account. Most of our plans also include an initial risk analysis for no additional cost.

How do I report crypto income from staking, liquidity pools, yield farming, and gaming income?

These are complex crypto investments. Although the general rules of capital gains and losses still apply, calculating the taxable gains is complicated. Some gain calculation companies provide pieces of this growing crypto reconciliation puzzle, while others do not. If you have a complex situation and need guidance, we can help.

Can you help with my crypto gain calculation even if my accountant doesn't know much about cryptos?

Few CPAs and tax preparers really understand crypto tax reporting. Although accountants can be good at many bookkeeping and tax reporting activities, they often are intimidated by and unprepared for the growing complexity of crypto gain reporting. We recommend preparing your own crypto gain calculations and providing them to your accountant for inclusion in your tax return. If you ask them to verify your crypto results, you'll probably scare them off, and they may not want to prepare your taxes any longer. If you need real crypto tax experts to help, contact the team at CryptoTaxAudit.

Why is the crypto gain calculation service I'm using generating the wrong, or different, results?

Unfortunately, this experience is common. Bad results can occur for different reasons. You may have missing transaction records or price histories, be submitting incorrect data collecting from an exchange, or be using the service incorrectly. If you have complex crypto histories beyond centralized exchanges including DeFi, NFTs, or private wallets, capturing and recording this information properly can also cause calculation issues. Classifying records and reconciling movements is very complicated. Also, none of the services generate consistent results. Ultimately, if your transactions are too complex, you may have to file your tax return using a good-faith estimate of your net gains and income. The best thing you can do is do your best and then protect yourself. Our Audit Defense membership plans can help.

Can you calculate my crypto gains, even if I have NFTs, DeFi, and other complex crypto investments?

Yes, absolutely. We have a dedicated team of crypto analysts who specialize in the cases that others find too difficult. Many of the top NFT, DeFi, and crypto investors use our crypto analysis and gain calculation services, so you can be assured that no one will generate a more accurate and defensible result. (Yes, our goal is to have results that can stand up in court, in case you are ever audited by the IRS.)

Can you help me file my taxes even if I haven't filed for the last year or two?

Yes, we can help. If your income is $0, you don't have to file a tax return. However, if you don’t file, the statute of limitations on auditing never starts. This is an important protection. Therefore we always recommend filing an annual tax return. If you haven't filed for other reasons, we can help you get back into compliance. The sooner the better. Schedule a complimentary call with us today to discuss your needs and see how we can help.

How much crypto income do I need to make before I have to report it on my tax return?

U.S. law requires reporting of all crypto-related income. There is no minimum amount. Cryptos generate taxable income whenever you sell, exchange, or swap ownership of a token for ownership in something else whether another crypto, a stablecoin, or fiat currency. Most crypto rewards are also considered taxable income at their fair market value in U.S. dollars on the day they’re received.

Can I schedule a private consultation directly with Clinton Donnelly, the Crypto Tax Fixer?

Clinton had limited availability, however, as the Crypto Tax Fixer, he is in high demand. Click the Consultation link at the top of the page to book a paid private consultation with Clinton at a mutually convenient time. All consultations are held by online video conference. Note that you may need to be time-flexible to meet with Clinton due to his busy schedule, but people also benefit from the time Clinton invests in advising taxpayers of their risks and options.

Can you help me get back into IRS compliance after not filing, or not correctly filing, for the last year or more?

Yes, we can help. We work with clients to help them get back into compliance every day. If you have recently received a letter or notice from the IRS, your situation may be more serious. Reach out to us today for a complimentary call so we can diagnose what's happening, make recommendations, and suggest a course of action to get you back into compliance. Then you can sleep better at night knowing that you've handled the burden of outstanding IRS issues, which can escalate significantly if not handle properly and on a timely basis.

How do I sign up as a new tax preparation client?

We welcome everyone as Audit Defense members. This is the number one thing you can do to protect yourself in an IRS audit, and it doesn't matter who prepared your tax return. However, if you are looking for expert crypto tax preparation services, our team is very selective and adds only a small number of new clients each year. Contact us if you want to learn more about our crypto tax services. We are pleased to answer your questions.

How does owning crypto affect my tax liability?

Crypto owners only need to report their trading gains and income. If you are stacking bitcoins or other currencies (HODLing), and you aren't selling, then there is no current taxable gain since nothing is being sold, exchanged, or swapped. When you do, then there is a taxable reporting event.

Can the IRS track my cryptos even if I bought my bitcoin privately?

Yes, they can and they do. Crypto exchanges that service U.S. clients now all file a 1099-K report with the IRS at the end of each year if you receive or sell more than $600 in crypto. Since these exchanges also provide fiat on-ramp and off-ramp services, the IRS is well aware of those transactions and can estimate your portfolio size based on these movements as well. Although the IRS can be slow, they aren't stupid. They have the staff, the tools, and the legal power to access your information and the authority to audit any taxpayer they choose and for any reason.

Can you defend me if I'm being audited by the IRS?

Yes, we can. If you're an Audit Defense member, we already notified you that the audit was coming so we had time to prepare. If you're not yet a member, you were probably surprised and maybe even shocked to receive the IRS letter. Schedule a complimentary call with us today so we can review your case and advise you on how to proceed. We'll provide an initial quotation for our services, require you to become an Audit Defense member, and move into action to defend you against the IRS. But don't delay. The IRS doesn't play games.

How far back in time can the IRS go to audit me?

The answer is either 3 years, 6 years, or forever. The statute of limitations limits the IRS to 3 years to audit your tax return, but there are exceptions. If your income is under-reported by 25% or more, the limit is extended to 6 years. This under reporting is easier than you think because of how crypto trading income is calculated. If you file a fraudulent return, there is no limit. The IRS can audit you forever. Also, if you don't file Form 8938 “Specified Foreign Financial Assets” when required, then the 3-year limit doesn’t start until the form is filed with the IRS.

Is receiving an IRS CP2000 Notice considered the start of an audit?

Yes, we consider it an audit. A CP2000 letter is sent when the IRS computers detect that you haven't accounted for all the W-2, 1099, and K-1 form income the IRS has been notified about from the companies that paid you money during the year. Failure to account for all this income on your tax return is the main cause of an audit. A CP2000 audit is computer-driven, giving you just 30 days to respond to the IRS. If you don't respond promptly, the IRS will charge you the extra tax that the computer calculates. We can assist you with a CP2000 audit and respond in the most favorable way for your situation, but time is of the essence.

What is the difference between an IRS audit and an IRS examination?

The IRS loves double-speak. IRS audits are called "examinations" by the IRS. Auditors are called "revenue agents". And the types are examinations are either computer-driven or human-driven. The human-driven ones are the complex, in-depth, and scary ones that everyone tries to avoid.