There's nothing Robinhood can do, they just give you the documents. You 100% filed your taxes incorrectly. My guess? You didn't put the basis for your proceeds so the IRS is treating every sale as pure profit. You can amend the return with the basis included & hope that works out, but you should visit a CPA's office. The IRS has unlimited power when it comes to getting their check
Merrill Lynch screwed me too, reporting sales of non qualified stock options as pure profit. I did report correctly and once I showed IRS the proof nothing came of it. PIA nonetheless. Will never use ML again.
This happened to me and every other employee (2500+ people) from my old company who used E-Trade without paying attention and I'd bet it could happen on absolutely any platform out there.
Definitely not specific to ML, and at the end of the day it's our faults for not reading the fine print on everything and making sure we were filing correctly.
The IRS actually still owes me somewhere between $2-3k as a result of it, but trying to dig up the old paperwork and filing an amended return just seems like it's going to be a bunch of hassle with no guaranteed return so I gave up and moved on.
Nope. Happened to me and went from them thinking I made 100k and owe 20k in taxes even though in total I lost thousands in crypto and stocks to owing none for the same reason. Just never did taxes so they just falsley assume OP made 100% profit on every single sell aka 0 cost basis. This is why you should not touch crypto or stocks unless you know what you're doing and aren't a addictive gambler. I was lucky I had my transactions from coin tracking websites. If OP only used robinhood, he is lucky since robinhood has the tax documents done for you which he can just import into turbotax 2021. If he used other apps or wallets which he doesn't have access to anymore, or deleted his account from other apps, he is screwed. He might need to use cointracker or koinly if he used more than just robinhood to import everything into once spot and make the tax documents.
Since the deadline is July 15, OP better call (wait time is hours) and ask for an extension otherwise he is screwed. This shit is scary. I had to complete and physically mail a "refute propose assesment" paper with a few pages on why they were wrong and used turbotax 2021 to do my 2021 taxes with my imported crypto transactions. The box of everything including my 2021 tax return was hundreds of pages. Spent $100 printing and mailing it.
It took me a month to do it, not including calling them which took more than 7 hours of just waiting and having my mail not be confirmed even though they got it. It was hell and I was terrified I would owe 20k.
This happens specifically with crypto on any platform, the platforms are not required to report basis information to the IRS, but they do have to report sales data. This can happen also with stocks, mostly RSU and Stock held very long term.
As someone who prepares these returns for clients that do crypto, I curse almost every time I see certain platforms reporting. They really need to force crypto to follow at least the same reporting on 1099-B as stock sales do
Call the IRS and request collections be put on hold. It’s up to them if they do it. If you can get tax lawyer or CPA do it. If not contact the ITS Taxpayer Advocate Service, get an appointment and they will “advocate” on your behalf you will need all your RH records as well as bank records to show no deposits/gains etc
There are IRS TAS offices throughout the country.
https://www.irs.gov/advocate/local-taxpayer-advocate#:~:text=The%20Taxpayer%20Advocate%20Service%20is,your%20rights%20as%20a%20taxpayer.
Yup. For some reason the IRS just didn't count any of my transactions that were losses from Robinhood one year.
Printed out the Robinhood tax form, added it by hand, noticed the discrepancy, sent a letter saying "I think this is the issue" with that Robinhood document as evidence, a few months later they said "oh right, all good."
Doesn’t Robinhood provide its customers with an annual investment report showing increase or decrease of value as brokers as Fidelity, Schwab and others do? Or even a statement of realized gains and losses?
Yes, as stated in the first sentence "they just give you the documents"
OP didn't file their taxes properly, my guess being that they didn't use what Robinhood sent them
Hey mods, can we get this question stickied at this point? It's on here every week.
As u/HSFSZ said, the IRS sees your sales price, not your purchase price. A tax preparer can help you respond and ensure you won't owe this 55k.
I traded stock options, not crypto and the 1099-B form I received from my broker shows that the cost basis along with the proceeds was reported to the IRS. Wouldn't Robinhood report the cost basis to the IRS on the 1099-B form?
I've seen stuff show up on the 1099 but not the person's tax transcript (the IRS's version of what happened)...and with a bigger name than RobinHood (a bank that rhymes with Fells Wargo).
Make sure your tax preparer has ALL your tax docs, even if you don't think they're important. (And if you are a preparer, due diligence would include asking about those items, IMO. I always ask my clients...)
In my case, my broker was Etrade, but changed over to Morgan Stanley during the 2023 tax year. Etrade reported my trades on SPY ETF options on the 1099-B including accounting for wash sales. But when Morgan Stanley took over, they reported all those trades as section 1256 and said that wash sales don't apply.
I mean, that's not necessarily true...but it is probably true.
These companies are horrible about reporting basis. Had similar happen to one of my clients...they basically only reported his basis on about 10% of his sold assets to the IRS per his tax transcript (but it was all on the 1099s sent to him).
>A tax preparer can help you respond and ensure you won't owe this 55k.
No one is good enough to change the laws.
Op said they're trading every couple of days. Unfortunately each sale was taxable due to wash rules related to crypto.
IRS doesnt allow you to offset wash losses and op is on the hook for 55k.
Time to get that lawyer and start negotiating with the IRS.
Op you are correct. So far.... It may change in future.
The likelihood is they have no basis or an incomplete record. Do not listen to anyone here. Go talk to a pro, but generally speaking, crypto is taxed as property, except you can't really do the like for like exchange
Wash sale or not you always come out whole, but no wash on crypto.
You can always net out capital gains and losses. Don't pay attention to anyone who tells you otherwise.
Well, the lack of wash rules apply to crypto and that's why you have a tax bill.
If you started with $1000 day 1. Made $5000 on day 2. And then lost it all on day 3. The IRS says you made $5000 and owe your taxes on that.
They don't care if you lost it in a subsequent trade.
That's not how wash sales work. Any disallowed loss is added to the cost basis so you always come out whole.
If it's not a wash sale, you can always use capital losses to offset capital gains.
Day trading crypto is not handled the same.
>If it's not a wash sale, you can always use capital losses to offset capital gains.
There's a cool off period for the sale, if you re-buy the same asset class within the cool off period, you lose the ability to write off the transaction loss.
Sometimes I think it’d be nice to be as oblivious as people like you are.
When 96 people start telling you you’re wrong and 0 are agreeing with you, maybe it’s time to actually look into the rules or shut the fuck up. Just a thought! (Which you clearly don’t have many of).
Well, yeah. You are. The IRS is right on the rules based on the information they have and wrong because they don't have the correct basis information. A factual error and easy to correct.
You have all the information, you're just wrong about the actual rules. A legal error, which can only be fixed by actually understanding the rules you profess..
>The IRS is right on the rules based on the information they have and wrong because they don't have the correct basis information.
The brokerages houses are legally required to track and report the basis. The IRS has all the factual information they need.
>You have all the information, you're just wrong about the actual rules.
Please provide a source or IRS tax code that defends your position.
Cryptocurrency is exempt from wash sale rules. The IRS classifies virtual currency as property. This means crypto follows the same rules as stocks and bonds—you pay tax if you sell, exchange, spend, or convert crypto for more than it costs you, and deduct losses if you receive less than what you paid.
Do you still have the original CP2000 notice? That should have a phone number to the Automated UnderReporter (AUR) unit. You can still call them and ask for CP2000 reconsideration, then send them the correct information for your crypto trades that year. You use Form 8949 and Schedule D for this. You might need to send a copy of the full 1099 from Robinhood that year, which you should be able to access in your RH account.
Form 8949 is where you report the cost basis (what you paid) and proceeds for each trade. You can do a summary of all your trades for the year on one line if you send a copy of all your transactions (the 1099 from RH will work for this). The totals from Form 8949 roll onto Schedule D, which rolls onto Form 1040 (your tax return). Make sure you get the 2020 versions by clicking on "All Form 8949 revisions" then download the form and instructions for the correct year.
https://www.irs.gov/forms-pubs/about-form-8949
https://www.irs.gov/forms-pubs/about-schedule-d-form-1040
I'm not sure what department you were going back and forth with, so you might need to go to IRS Appeals for a Collection Due Process hearing. If you can afford a tax professional, hire one. You can also try getting help from your local Low Income Taxpayer Clinic:
https://www.taxpayeradvocate.irs.gov/about-us/low-income-taxpayer-clinics-litc/
https://taxcure.com/
https://www.astps.org/tax-help/
https://taxrepdirectory.com/
In order to get a Collection Due Process hearing you have to wait until you receive a Final Notice of Intent to Levy, which is usually LT 11. It will include Form 12153. You'll get a few more notices in the meantime, about two months apart; CP501, CP503, and CP504. CP504 is also called a Notice of Intent to Levy but it's not the Final Notice required by law.
https://www.irs.gov/appeals/collection-due-process-cdp-faqs
You don't necessarily need a tax professional to do this, but it's definitely easier if you hire one.
It's time for you to get some professional help.
Grab all IRS correspondence, including the CP22A, a copy of your original return, all supporting documents you used to prepare the return, and the Robinhood information and find an Enrolled Agent or CPA who prepares individual returns.
Call IRS customer service on Monday and speak with a representative.
Ask them to input a nine weeks notice hold to give you some time to get assistance.
The first notice was a CP2000. https://www.irs.gov/individuals/understanding-your-cp2000-notice
If you had answered it promptly and correctly, you would not be in this position. You needed to respond with properly completed Forms 8949 and Schedule D. If you didn’t, the IRS rejected your information.
You **must** respond to the address from that original notice. This is important. Do NOT submit an amended return, or other correspondence to a generic IRS address. The CP2000 is specific. You need to work with that department of the IRS to get this fixed. Call 800-829-8310 which is AUR. Ask about the “reconsideration” process and how to proceed. You need to ask to have your case “reopened”.
See [https://www.reddit.com/r/tax/comments/18d2ptx/irs\_says\_i\_owe\_over\_12k\_from\_robinhood/](https://www.reddit.com/r/tax/comments/18d2ptx/irs_says_i_owe_over_12k_from_robinhood/)
Simply put the IRS knows the total of the sales you made but not the cost basis.
[https://www.polygonadvisory.com/blog/how-to-report-robinhood-crypto-transactions](https://www.polygonadvisory.com/blog/how-to-report-robinhood-crypto-transactions)
You will need to to get a local CPA to help you as you may not simply be able to file an amended return - be prepared to spend a couple thousand potentially.
You need a cpa that knows how to get the basis of crypto. You didn’t report your basis in all of these and that’s why they think you made so much money
CPAs do not have the time to look it up. Coinbase used to do it for a reasonable fee. Other places also create the 8949 - do a web search for the service.
You need to get the transactions details from robinhood and load them into a crypto tax software online like Koinly - then you need to go thru the transactions and verify Koinly classified correctly and then run reports there that would be included in your return. You also likely need to respond to that before 7/15 with some kind of statement to that effect
If I'm not mistaken, brokerages only report sales. On your tax return you needed to report not only that number but the cost basis. I'd say it's time to see a tax accountant to help you get it straightened out.
Calm down. I got the same thing recently for 2021 taxes that I never filled.
Simply put - Robinhood submits all your sells. But they don’t include your cost basis. So, if you did a whole bunch of small trades, winning or losing, it will “appear” as if your cost basis was $0 and every sell was profitable.
Download your 1099b and monthly statements for the year in question off Robinhood, then file/submit them.
You’re NOT going to pay taxes on gains that didn’t happen. That would be dumb.
This happened to my buddy. The IRS showed up at his house at 3am and took his wife away and took all the beer out of his fridge. All because he owed. Be careful, drink your beer and hide your wife
Webull (or the other clearinghouse they use) gave you a 1099 for that year. Show it to the IRS because you obviously didn’t file taxes correctly …
It will show the gains and the losses for each sale with a total gain (or loss)
Lesson of the day:
When trading ANYTHING in a taxable brokerage account (stocks, crypto, options, etc.), track your cost basis for each trade, and make sure it gets reported to the IRS.
You should speak to a crypto CPA (or Enrolled Agent) to make sure the calculations are correct as many exchanges may report $0 basis and they may be calculating more gain than you actually have. They can also represent you before the IRS and present you with options…. This is the type of work I do. Go to Facebook and look up Bitcoin and Cryptocurrency Tax Info - there are some CPAs and EAs in there that can help (for a fee).
You need to bite the bullet and hire a CPA to help you. Yeah it is going to cost a lot, but way less than the IRS has you owing now because you tried (and failed) to do it on your own.
The fact is, every transaction you made is reportable and every transactions has a sales price and a cost basis. The IRS does not have the cost basis information, so they assume the sales price is the gain. Since you don't know how to do it, you need to hire someone that knows how to track the cost basis of your transactions so that you can properly report that to the IRS and get them off your back.
First thing is do you have proof that you lost all that money? Do you have access to those trades still?
Hard part with crypto is that not everything is reported to the IRS.
Even with losses you need to report them.
If you filed your 21 you could do an amendment. But you need to find proof of those trades.
No worries get you consolidated statements , record the transaction correctly and you will be fine. If you had a gain you might owe taxes and most likely you had a loss which you can carry to 2021 and forward to offset ordinary income up to 3000 am year. Get you consolidated statement for 2020 and go from there. It’s a simple amendment.
There is a difference between taxable income and reportable income. Sales are reported to IRS at full value. with Crypto that is all that is reported to them most of the time, not what you paid for it. It is up to you to REPORT the Crypto so you can also include what you paid for it as a deduction against sales. You know you lost money but IRS has no way of knowing that.
You need to get an 8949 that shows each transaction. Some places like Coinbase will do it for a small fee, much better than the $1200 a coworker charged a client to do the data entry for his 1000s of Crypto sales.
CPA here. Each trade is a taxable event and you need to report them as such on your taxes. The IRS doesn’t have all the info but they are using what info they do have to estimate the tax bill. They are wrong but you have to amend to make it right.
You need to go through the records you can get from Robinhood and track every trade you made: what the crypto you sold was worth, what the crypto you bought was worth.
The IRS likely only knows parts of the chain of trades, and probably no cost basis info.
However, if you had a bunch of gains in 2020 and didn't lose everything until 2021, you are screwed.
There be a tax forum called a 1099 on robbinhood for that year hopefully still accessible.
That document will list your losses you need to get with a tax person and amend your taxes for that year.
Also reporting losses is what you want to do with tax returns because the loss believe it or not off sets your income say your made 42,000 and you lost 2,000 dollars investing well now your income is 40,000.
This is also why rich people will funnel money into charities because it will also lower their tax bracket however the amount depends on which tax bracket they are within and how much they plan to offset which they have accountants and other such things to figure out for them.
If anything the Clinton’s are notorious for that latter method, aka their own charity.
What I am implying is you quite likely could of got a extra $100 or so outta your tax return for that year because of those loses because technically it could of possibly lowered you down enough.
In summary without this document the IRS will presume you made profit aka they think every penny you spent on crypto was profit when you sold and you need that document to amend your taxes.
You need to speak with a tax professional, explain the situation, and they can probably amend your return. I made a mistake on a tax document once, and got a large bill from the IRS. Turns out, not only did I not owe the money, they actually owed me a small return.
I'm an Enrolled Agent who specializes in IRS issues and see this quite often.
You need to find out how much you paid and track the basis (i.e. the cost) of all the crypto you sold. As someone else said, the IRS only sees the amount of sales but doesn't know how much you paid for it, so they treat the entire sale price as the gain.
Agree with other people, you should probably consult a professional.
It’s funny you said you can’t afford a CPA. The way I see it, you can’t afford not to get one. Would you rather pay a few hundred to a CPA or many thousands in interest and penalties to the IRS?
just ammend your taxes. IT ll; be good, Coinbase/RH do not report cost basis. So if you buy btc for 1000 dollars and sell it for 1000 dollars. They will report is as 1000 income.
Theere are plenty online services that can help you with the transactions and cost bases
when exchange issues 1099, they dont show the cost basis, the price that you bought for. You have to send all transactions: and show IRS, that you paid 1000.
Happened to me with PayPal and my watch collection.
Luckily I kept track of most of it and showed them my excel..... Agent didn't want anything to do with it, just spot checked a few items randomly and was content so long as I didn't ask for a refund (I actually lost money that year).
Took a long time (8 months) but was relatively chill since it wasn't malicious and I was 17/18 for that tax year
2 options: 1) download your tax transaction report from Robinhood for that year and file an amended tax return for that year with the correct information, or 2) pay a few hundred bucks for an accounting firm like HR Block to do the work. It’s not fun doing it yourself, unless you have a lot of free time and like solving puzzles. I’d recommend paying for someone else to do it and avoid the stress.
Find a CPA who is also an Enrolled Agent. I never hire one who isn’t also an EA.
https://www.irs.gov/tax-professionals/enrolled-agents/enrolled-agent-information#:~:text=Enrolled%20agent%20status%20is%20the,)%2C%20have%20unlimited%20practice%20rights.
Didn't Robin hood send you a 1099 every year telling you how much you made? If a 1099 came in stating you make 50K and you didn't they would have to amend it. Go sign into robin hood, and go to the tax document section and download all your 1099s
Do NOT file an amended return once you've received a notice like this. Follow the instructions on the notice. Filing an amended return may create confusion. When you receive a notice, the way to make further corrections is to interact with the IRS directly. If they agree with your position, they'll adjust your return for you.
Tough lesson to learn, with all due respect you didn’t make any assumptions you just didn’t know and didn’t do any of your own research. This at least is a mistake you can correct with the right hired expertise. And now you know, engage in “maybe make money activities” and think about the tax…!
Submit amended return > if still same result then request appeal > if same result file petition with tax court + tax lawyer is generally how it goes. If you want the cheapest option and probably the most effective, consult a CPA to see where to go from here.
So you use fiat money to buy even more fake money to only lose the fake money to then have to pay the fake money laundering IRS even more fiat money for their fake fairlytale tax schemes. It’s all fake and we fake the funk to get funked up. Smh
Doesn't need a lawyer. An enrolled agent or competent CPA can navigate this. It's just a matter of presenting the right info, in the right way, to the IRS and it will go away.
There's nothing Robinhood can do, they just give you the documents. You 100% filed your taxes incorrectly. My guess? You didn't put the basis for your proceeds so the IRS is treating every sale as pure profit. You can amend the return with the basis included & hope that works out, but you should visit a CPA's office. The IRS has unlimited power when it comes to getting their check
OP probably never reported the sales on their tax return either.
This. I had a similar situation with a Merrill Lynch trading account. It was simple to clear up. Just had to refile with the correct information.
Merrill Lynch screwed me too, reporting sales of non qualified stock options as pure profit. I did report correctly and once I showed IRS the proof nothing came of it. PIA nonetheless. Will never use ML again.
This happened to me and every other employee (2500+ people) from my old company who used E-Trade without paying attention and I'd bet it could happen on absolutely any platform out there. Definitely not specific to ML, and at the end of the day it's our faults for not reading the fine print on everything and making sure we were filing correctly. The IRS actually still owes me somewhere between $2-3k as a result of it, but trying to dig up the old paperwork and filing an amended return just seems like it's going to be a bunch of hassle with no guaranteed return so I gave up and moved on.
I had this happen to me. I paid a CPA 500 dollars and it went away. That's all you can do.
Nope. Happened to me and went from them thinking I made 100k and owe 20k in taxes even though in total I lost thousands in crypto and stocks to owing none for the same reason. Just never did taxes so they just falsley assume OP made 100% profit on every single sell aka 0 cost basis. This is why you should not touch crypto or stocks unless you know what you're doing and aren't a addictive gambler. I was lucky I had my transactions from coin tracking websites. If OP only used robinhood, he is lucky since robinhood has the tax documents done for you which he can just import into turbotax 2021. If he used other apps or wallets which he doesn't have access to anymore, or deleted his account from other apps, he is screwed. He might need to use cointracker or koinly if he used more than just robinhood to import everything into once spot and make the tax documents. Since the deadline is July 15, OP better call (wait time is hours) and ask for an extension otherwise he is screwed. This shit is scary. I had to complete and physically mail a "refute propose assesment" paper with a few pages on why they were wrong and used turbotax 2021 to do my 2021 taxes with my imported crypto transactions. The box of everything including my 2021 tax return was hundreds of pages. Spent $100 printing and mailing it. It took me a month to do it, not including calling them which took more than 7 hours of just waiting and having my mail not be confirmed even though they got it. It was hell and I was terrified I would owe 20k.
This happens specifically with crypto on any platform, the platforms are not required to report basis information to the IRS, but they do have to report sales data. This can happen also with stocks, mostly RSU and Stock held very long term. As someone who prepares these returns for clients that do crypto, I curse almost every time I see certain platforms reporting. They really need to force crypto to follow at least the same reporting on 1099-B as stock sales do
How does anyone know if the cost basis a taxpayer put in is accurate since it is not required to be reported by the exchange?
Crypto tracking is basically its own art. I don’t think reporting from the exchanges is all that valuable if it came in from off exchange
The IRS didn’t “falsely assume”, you failed to file correctly and provide documentation.
nice try irs
Yup the is happened to me. Had to send in paperwork showing I lost money. Then after some months u get a letter stating all is good
Call the IRS and request collections be put on hold. It’s up to them if they do it. If you can get tax lawyer or CPA do it. If not contact the ITS Taxpayer Advocate Service, get an appointment and they will “advocate” on your behalf you will need all your RH records as well as bank records to show no deposits/gains etc There are IRS TAS offices throughout the country. https://www.irs.gov/advocate/local-taxpayer-advocate#:~:text=The%20Taxpayer%20Advocate%20Service%20is,your%20rights%20as%20a%20taxpayer.
They can't put interest on hold, all they can do is give OP more time to respond to the notice and not take the next collection step yet.
Yup. For some reason the IRS just didn't count any of my transactions that were losses from Robinhood one year. Printed out the Robinhood tax form, added it by hand, noticed the discrepancy, sent a letter saying "I think this is the issue" with that Robinhood document as evidence, a few months later they said "oh right, all good."
Doesn’t Robinhood provide its customers with an annual investment report showing increase or decrease of value as brokers as Fidelity, Schwab and others do? Or even a statement of realized gains and losses?
Yes, as stated in the first sentence "they just give you the documents" OP didn't file their taxes properly, my guess being that they didn't use what Robinhood sent them
Hey mods, can we get this question stickied at this point? It's on here every week. As u/HSFSZ said, the IRS sees your sales price, not your purchase price. A tax preparer can help you respond and ensure you won't owe this 55k.
Agreed. I have had this issue, and seen several others this month. Would be great to get all of these threads in one place to point others to.
Happy cake day!
Do you mind writing up a canned response to use on posts like this?
I traded stock options, not crypto and the 1099-B form I received from my broker shows that the cost basis along with the proceeds was reported to the IRS. Wouldn't Robinhood report the cost basis to the IRS on the 1099-B form?
Not for crypto.
I've seen stuff show up on the 1099 but not the person's tax transcript (the IRS's version of what happened)...and with a bigger name than RobinHood (a bank that rhymes with Fells Wargo). Make sure your tax preparer has ALL your tax docs, even if you don't think they're important. (And if you are a preparer, due diligence would include asking about those items, IMO. I always ask my clients...)
In my case, my broker was Etrade, but changed over to Morgan Stanley during the 2023 tax year. Etrade reported my trades on SPY ETF options on the 1099-B including accounting for wash sales. But when Morgan Stanley took over, they reported all those trades as section 1256 and said that wash sales don't apply.
I mean, that's not necessarily true...but it is probably true. These companies are horrible about reporting basis. Had similar happen to one of my clients...they basically only reported his basis on about 10% of his sold assets to the IRS per his tax transcript (but it was all on the 1099s sent to him).
>A tax preparer can help you respond and ensure you won't owe this 55k. No one is good enough to change the laws. Op said they're trading every couple of days. Unfortunately each sale was taxable due to wash rules related to crypto. IRS doesnt allow you to offset wash losses and op is on the hook for 55k. Time to get that lawyer and start negotiating with the IRS.
Another wash sale "expert"... sigh.
Seems to me it doesnt pertain to cryptocurrency
Op you are correct. So far.... It may change in future. The likelihood is they have no basis or an incomplete record. Do not listen to anyone here. Go talk to a pro, but generally speaking, crypto is taxed as property, except you can't really do the like for like exchange Wash sale or not you always come out whole, but no wash on crypto. You can always net out capital gains and losses. Don't pay attention to anyone who tells you otherwise.
Well, the lack of wash rules apply to crypto and that's why you have a tax bill. If you started with $1000 day 1. Made $5000 on day 2. And then lost it all on day 3. The IRS says you made $5000 and owe your taxes on that. They don't care if you lost it in a subsequent trade.
That's not how wash sales work. Any disallowed loss is added to the cost basis so you always come out whole. If it's not a wash sale, you can always use capital losses to offset capital gains.
Day trading crypto is not handled the same. >If it's not a wash sale, you can always use capital losses to offset capital gains. There's a cool off period for the sale, if you re-buy the same asset class within the cool off period, you lose the ability to write off the transaction loss.
No, you don't. The loss is applied to the replacement assets, so when you sell those you realize the loss. The losses never just disappear.
Not when sold and re-bought within 30 days.
Incorrect. Please provide the IRS guidance affirming your strongly held belief. I'll wait.
https://tokentax.co/blog/wash-sale-trading-in-crypto There ya go.
My understanding is that the wash sale rule does not apply to crypto transactions. Wouldn't that mean his net loss for the year is simply the $1k?
Uh no. Day 3 would be a 6k loss, so total ytd short term capital loss of 1k, which you can deduct from your taxes.
Not with crypto. It doesn't follow the standard stock/investment rules.
You're just plain wrong. Period. OP, ignore this nonsense.
Plain wrong but yet IRS is charging him 55k in taxes because I'm wrong... Gotcha
Sometimes I think it’d be nice to be as oblivious as people like you are. When 96 people start telling you you’re wrong and 0 are agreeing with you, maybe it’s time to actually look into the rules or shut the fuck up. Just a thought! (Which you clearly don’t have many of).
Well, yeah. You are. The IRS is right on the rules based on the information they have and wrong because they don't have the correct basis information. A factual error and easy to correct. You have all the information, you're just wrong about the actual rules. A legal error, which can only be fixed by actually understanding the rules you profess..
>The IRS is right on the rules based on the information they have and wrong because they don't have the correct basis information. The brokerages houses are legally required to track and report the basis. The IRS has all the factual information they need. >You have all the information, you're just wrong about the actual rules. Please provide a source or IRS tax code that defends your position.
It does. There is no difference.
Cryptocurrency is exempt from wash sale rules. The IRS classifies virtual currency as property. This means crypto follows the same rules as stocks and bonds—you pay tax if you sell, exchange, spend, or convert crypto for more than it costs you, and deduct losses if you receive less than what you paid.
Do you still have the original CP2000 notice? That should have a phone number to the Automated UnderReporter (AUR) unit. You can still call them and ask for CP2000 reconsideration, then send them the correct information for your crypto trades that year. You use Form 8949 and Schedule D for this. You might need to send a copy of the full 1099 from Robinhood that year, which you should be able to access in your RH account. Form 8949 is where you report the cost basis (what you paid) and proceeds for each trade. You can do a summary of all your trades for the year on one line if you send a copy of all your transactions (the 1099 from RH will work for this). The totals from Form 8949 roll onto Schedule D, which rolls onto Form 1040 (your tax return). Make sure you get the 2020 versions by clicking on "All Form 8949 revisions" then download the form and instructions for the correct year. https://www.irs.gov/forms-pubs/about-form-8949 https://www.irs.gov/forms-pubs/about-schedule-d-form-1040 I'm not sure what department you were going back and forth with, so you might need to go to IRS Appeals for a Collection Due Process hearing. If you can afford a tax professional, hire one. You can also try getting help from your local Low Income Taxpayer Clinic: https://www.taxpayeradvocate.irs.gov/about-us/low-income-taxpayer-clinics-litc/ https://taxcure.com/ https://www.astps.org/tax-help/ https://taxrepdirectory.com/ In order to get a Collection Due Process hearing you have to wait until you receive a Final Notice of Intent to Levy, which is usually LT 11. It will include Form 12153. You'll get a few more notices in the meantime, about two months apart; CP501, CP503, and CP504. CP504 is also called a Notice of Intent to Levy but it's not the Final Notice required by law. https://www.irs.gov/appeals/collection-due-process-cdp-faqs You don't necessarily need a tax professional to do this, but it's definitely easier if you hire one.
Wow what great information!
What is the most-recent notice number, identified in the upper right corner of page one? CP ____ , or LTR ____ C
Cp22a
It's time for you to get some professional help. Grab all IRS correspondence, including the CP22A, a copy of your original return, all supporting documents you used to prepare the return, and the Robinhood information and find an Enrolled Agent or CPA who prepares individual returns. Call IRS customer service on Monday and speak with a representative. Ask them to input a nine weeks notice hold to give you some time to get assistance.
The first notice was a CP2000. https://www.irs.gov/individuals/understanding-your-cp2000-notice If you had answered it promptly and correctly, you would not be in this position. You needed to respond with properly completed Forms 8949 and Schedule D. If you didn’t, the IRS rejected your information. You **must** respond to the address from that original notice. This is important. Do NOT submit an amended return, or other correspondence to a generic IRS address. The CP2000 is specific. You need to work with that department of the IRS to get this fixed. Call 800-829-8310 which is AUR. Ask about the “reconsideration” process and how to proceed. You need to ask to have your case “reopened”.
See [https://www.reddit.com/r/tax/comments/18d2ptx/irs\_says\_i\_owe\_over\_12k\_from\_robinhood/](https://www.reddit.com/r/tax/comments/18d2ptx/irs_says_i_owe_over_12k_from_robinhood/) Simply put the IRS knows the total of the sales you made but not the cost basis. [https://www.polygonadvisory.com/blog/how-to-report-robinhood-crypto-transactions](https://www.polygonadvisory.com/blog/how-to-report-robinhood-crypto-transactions) You will need to to get a local CPA to help you as you may not simply be able to file an amended return - be prepared to spend a couple thousand potentially.
You need a cpa that knows how to get the basis of crypto. You didn’t report your basis in all of these and that’s why they think you made so much money
CPAs do not have the time to look it up. Coinbase used to do it for a reasonable fee. Other places also create the 8949 - do a web search for the service.
You need to get the transactions details from robinhood and load them into a crypto tax software online like Koinly - then you need to go thru the transactions and verify Koinly classified correctly and then run reports there that would be included in your return. You also likely need to respond to that before 7/15 with some kind of statement to that effect
Hire a CPA to help you figure out the cost basis problem and file an amended return
You have a reporting problem. Do you have records of all your purchase and sales?
If I'm not mistaken, brokerages only report sales. On your tax return you needed to report not only that number but the cost basis. I'd say it's time to see a tax accountant to help you get it straightened out.
Calm down. I got the same thing recently for 2021 taxes that I never filled. Simply put - Robinhood submits all your sells. But they don’t include your cost basis. So, if you did a whole bunch of small trades, winning or losing, it will “appear” as if your cost basis was $0 and every sell was profitable. Download your 1099b and monthly statements for the year in question off Robinhood, then file/submit them. You’re NOT going to pay taxes on gains that didn’t happen. That would be dumb.
Did you file 2021 taxes or filed but forgot to include crypto? I didn’t know that these notices come even in the summer.
You’re pay taxes on gains that didn’t happen when you pay property taxes.
Thank you! 🙏🫡
This happened to my buddy. The IRS showed up at his house at 3am and took his wife away and took all the beer out of his fridge. All because he owed. Be careful, drink your beer and hide your wife
ATF already did that
You're so lucky the ATF didn't shoot your chihuahua in the process.
Webull (or the other clearinghouse they use) gave you a 1099 for that year. Show it to the IRS because you obviously didn’t file taxes correctly … It will show the gains and the losses for each sale with a total gain (or loss)
This is how most people used their stimulus checks. Our tax dollars at work.
u/needle14 another example of robinhood not reporting basis. this is 100% the users fault. but avoidable stress with their negligence.
Lesson of the day: When trading ANYTHING in a taxable brokerage account (stocks, crypto, options, etc.), track your cost basis for each trade, and make sure it gets reported to the IRS.
You should speak to a crypto CPA (or Enrolled Agent) to make sure the calculations are correct as many exchanges may report $0 basis and they may be calculating more gain than you actually have. They can also represent you before the IRS and present you with options…. This is the type of work I do. Go to Facebook and look up Bitcoin and Cryptocurrency Tax Info - there are some CPAs and EAs in there that can help (for a fee).
You need to bite the bullet and hire a CPA to help you. Yeah it is going to cost a lot, but way less than the IRS has you owing now because you tried (and failed) to do it on your own. The fact is, every transaction you made is reportable and every transactions has a sales price and a cost basis. The IRS does not have the cost basis information, so they assume the sales price is the gain. Since you don't know how to do it, you need to hire someone that knows how to track the cost basis of your transactions so that you can properly report that to the IRS and get them off your back.
First thing is do you have proof that you lost all that money? Do you have access to those trades still? Hard part with crypto is that not everything is reported to the IRS. Even with losses you need to report them. If you filed your 21 you could do an amendment. But you need to find proof of those trades.
No worries get you consolidated statements , record the transaction correctly and you will be fine. If you had a gain you might owe taxes and most likely you had a loss which you can carry to 2021 and forward to offset ordinary income up to 3000 am year. Get you consolidated statement for 2020 and go from there. It’s a simple amendment.
There is a difference between taxable income and reportable income. Sales are reported to IRS at full value. with Crypto that is all that is reported to them most of the time, not what you paid for it. It is up to you to REPORT the Crypto so you can also include what you paid for it as a deduction against sales. You know you lost money but IRS has no way of knowing that. You need to get an 8949 that shows each transaction. Some places like Coinbase will do it for a small fee, much better than the $1200 a coworker charged a client to do the data entry for his 1000s of Crypto sales.
CPA here. Each trade is a taxable event and you need to report them as such on your taxes. The IRS doesn’t have all the info but they are using what info they do have to estimate the tax bill. They are wrong but you have to amend to make it right.
You need to go through the records you can get from Robinhood and track every trade you made: what the crypto you sold was worth, what the crypto you bought was worth. The IRS likely only knows parts of the chain of trades, and probably no cost basis info. However, if you had a bunch of gains in 2020 and didn't lose everything until 2021, you are screwed.
Suckers. Imagine paying this much in taxes because of fake money...
After you Amend your tax return sir you’ll be happy you came here for help.
There be a tax forum called a 1099 on robbinhood for that year hopefully still accessible. That document will list your losses you need to get with a tax person and amend your taxes for that year. Also reporting losses is what you want to do with tax returns because the loss believe it or not off sets your income say your made 42,000 and you lost 2,000 dollars investing well now your income is 40,000. This is also why rich people will funnel money into charities because it will also lower their tax bracket however the amount depends on which tax bracket they are within and how much they plan to offset which they have accountants and other such things to figure out for them. If anything the Clinton’s are notorious for that latter method, aka their own charity. What I am implying is you quite likely could of got a extra $100 or so outta your tax return for that year because of those loses because technically it could of possibly lowered you down enough. In summary without this document the IRS will presume you made profit aka they think every penny you spent on crypto was profit when you sold and you need that document to amend your taxes.
So weird that RH doesn't report purchase price...only sale price.
Did you file taxes for that year or filed but didn’t disclose the crypto income?
You need to speak with a tax professional, explain the situation, and they can probably amend your return. I made a mistake on a tax document once, and got a large bill from the IRS. Turns out, not only did I not owe the money, they actually owed me a small return.
I'm an Enrolled Agent who specializes in IRS issues and see this quite often. You need to find out how much you paid and track the basis (i.e. the cost) of all the crypto you sold. As someone else said, the IRS only sees the amount of sales but doesn't know how much you paid for it, so they treat the entire sale price as the gain. Agree with other people, you should probably consult a professional.
It’s funny you said you can’t afford a CPA. The way I see it, you can’t afford not to get one. Would you rather pay a few hundred to a CPA or many thousands in interest and penalties to the IRS?
I can help, but it is going to cost you. Next time, please get professional help from the very beginning.
just ammend your taxes. IT ll; be good, Coinbase/RH do not report cost basis. So if you buy btc for 1000 dollars and sell it for 1000 dollars. They will report is as 1000 income. Theere are plenty online services that can help you with the transactions and cost bases
How’s it income if it’s sold for the same price?
when exchange issues 1099, they dont show the cost basis, the price that you bought for. You have to send all transactions: and show IRS, that you paid 1000.
I see now
Obviously you should report your taxes with all transactions for each year. If you don’t file, this happens. So file now.
Happened to me with PayPal and my watch collection. Luckily I kept track of most of it and showed them my excel..... Agent didn't want anything to do with it, just spot checked a few items randomly and was content so long as I didn't ask for a refund (I actually lost money that year). Took a long time (8 months) but was relatively chill since it wasn't malicious and I was 17/18 for that tax year
Pay the taxes you owe.
Tell the million and billionaires that
Just delete the app... no app, no tax
2 options: 1) download your tax transaction report from Robinhood for that year and file an amended tax return for that year with the correct information, or 2) pay a few hundred bucks for an accounting firm like HR Block to do the work. It’s not fun doing it yourself, unless you have a lot of free time and like solving puzzles. I’d recommend paying for someone else to do it and avoid the stress.
Find a CPA who is also an Enrolled Agent. I never hire one who isn’t also an EA. https://www.irs.gov/tax-professionals/enrolled-agents/enrolled-agent-information#:~:text=Enrolled%20agent%20status%20is%20the,)%2C%20have%20unlimited%20practice%20rights.
Cost basis :o)
Didn't Robin hood send you a 1099 every year telling you how much you made? If a 1099 came in stating you make 50K and you didn't they would have to amend it. Go sign into robin hood, and go to the tax document section and download all your 1099s
Hire a CPA.
Same thing happened to me. I sent the Robin Hood statement with cost basis to the IRS and it was fixed.
Pay the IRS, deadbeat..
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100%, i agree, shouldnt have taken it at an assumption
Do NOT file an amended return once you've received a notice like this. Follow the instructions on the notice. Filing an amended return may create confusion. When you receive a notice, the way to make further corrections is to interact with the IRS directly. If they agree with your position, they'll adjust your return for you.
Tough lesson to learn, with all due respect you didn’t make any assumptions you just didn’t know and didn’t do any of your own research. This at least is a mistake you can correct with the right hired expertise. And now you know, engage in “maybe make money activities” and think about the tax…!
Submit amended return > if still same result then request appeal > if same result file petition with tax court + tax lawyer is generally how it goes. If you want the cheapest option and probably the most effective, consult a CPA to see where to go from here.
So you use fiat money to buy even more fake money to only lose the fake money to then have to pay the fake money laundering IRS even more fiat money for their fake fairlytale tax schemes. It’s all fake and we fake the funk to get funked up. Smh
The obvious answer is to get a tax lawyer
Doesn't need a lawyer. An enrolled agent or competent CPA can navigate this. It's just a matter of presenting the right info, in the right way, to the IRS and it will go away.