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Bfletcher77
Returning Member

Help understanding and filing Crypto taxes

Hi All, I am hoping someone can give me some advice and point me in the right direction.  I'll try to summarize as much as possible.  

In 2021 I purchased crypto currency.  I've used 2 different platforms: Crypto.com and Uphold.  For Uphold I purchased XRP and have mainly held the investment all year, but I did request some withdrawals back to my bank account throughout the year.  They provided a 1099 form, and all looks pretty straightforward there, as far as how to report the tax due.

With crypto.com, it is a bit more complicated.  They provided me a tax report showing all yearly transactions reported.  I am to download and use this to calculate the tax due on my own.  The main issue here is that I had big problems occur back in April 2021. 

I attempted to sell ETH and transfer the proceeds back to my bank account.  In error, I instead sent it to this other tockenpocket wallet address, that I later discovered I did not have the credentials saved or written down for.  The funds were never able to be retrieved from this wallet.  As far as I know, they are still there, but I cannot access them, and they are forever lost to me unless I can unlock it somehow.

I further made things worse by trying to ask for online help when this occurred and I was panicking, only to be scammed from someone posing online as a customer service rep for "tokenpocket" into purchasing more ETH.  When I transferred the new purchase directly to the wallet they instructed me to, of course it was lost as well.  I did not receive any goods or services for what looks to be a "sale" or something I received in exchange for the coin.  I got nothing, except losing more of my investments, and feeling like a fool.

This leads me to my ultimate questions. 

1. I've already filed by 2021 taxes before receiving these statements from Uphold and Crypto.com in March.

    Do I have to amend my taxes for 2021 (and request an extension at this point) to report this; or can I wait          until next year and resolve it all then in 2022?

2. Based on my description of the stupid error I made trying to Sell off ETH, and the additional funds that         were stolen from me shortly after due to fraud, (I did not call the police or make a report.  The person was overseas that scammed me and I thought that it seemed hopeless to retrieve at the time so I gave up.), will I be responsible for paying tax for these sales of crypto to these 2 unknown wallet addresses, even if I never ultimately received the funds or any equal service?

 

I appreciate your time to read all this.  If you or someone you know may be able to help me, please let me know.  I'm starting to freak out a bit about this, as the tax could be pretty sizable if I have to claim as income.  I hope there is some way to avoid this and claim the losses.

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1 Reply
KrisD15
Expert Alumni

Help understanding and filing Crypto taxes

It will need to be resolved this year. 

 

Since this is a new subject (Crypto), it's hard to say how the IRS will want to handle your situation, but you will want to try to contact the IRS first, rather than have them come after you. 

 

You might want to contact a Tax Advocate office to get the ball rolling. 

 

Also, here is a link to a similar TurboTax question and answer which might help. 

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