Over the last few years, cryptocurrency has taken off. Many people have invested in Bitcoin, Ethereum, and other digital currencies, hoping to make a profit. But what some didn’t realize is that the IRS treats cryptocurrency like stocks and bonds. That means every time you sell, trade, or even use crypto to buy something, you could owe taxes on it.

If you didn’t report your crypto transactions correctly, you might now be facing tax debt. The IRS has been cracking down on unreported crypto gains, and many people are receiving letters demanding payment. If you’re in this situation, you’re not alone—and there are ways to fix it.

How Crypto Can Lead to Tax Debt

Many crypto investors got caught off guard because they didn’t realize how the IRS taxes digital assets. Here are a few common reasons people end up with tax trouble:

• Not Reporting Trades – Every time you trade one crypto for another, it’s considered a taxable event. Even if you never cashed out to dollars, the IRS still expects you to report any gains or losses.
• Using Crypto for Purchases – If you bought something with Bitcoin or another cryptocurrency, that transaction is treated like selling an asset. If the value of your crypto had gone up since you got it, you might owe taxes on the difference.
• Mining or Staking Rewards – If you earn crypto by mining or staking, the IRS sees it as income. That means you owe taxes on it just like you would on a paycheck.
• Failure to Track Transactions – Many crypto exchanges don’t provide clear tax documents. If you didn’t keep track of your trades, you might have underreported your income without realizing it.

What Happens if You Owe the IRS?

If you didn’t pay the right amount of taxes on your crypto, the IRS might send you a notice demanding payment. They could charge penalties and interest, making your debt grow quickly. In some cases, they may even take collection actions like wage garnishment or bank levies.

The good news is that there are ways to resolve your tax debt. The IRS offers options like payment plans and settlements, but navigating these programs can be complicated. That’s where working with a tax resolution expert can help.

Get Professional Help Before It’s Too Late

Dealing with the IRS can be stressful, especially when it comes to crypto taxes. The rules are complex, and making a mistake could cost you more money. A tax resolution professional can help you:

• Figure out exactly what you owe
• Negotiate with the IRS to lower penalties
• Set up a payment plan that works for you
• Possibly settle your debt for less than the full amount

If you’re facing tax debt because of cryptocurrency, don’t wait until the IRS takes action against you. Total IRS Relief specializes in helping people resolve their tax issues and get back on track. Contact us today to find out how we can help you fix your tax problems and move forward with peace of mind.