60 Days Left for U.S. Crypto Investors: Tax Law Changes You Need to Know

Time is running out for U.S. crypto investors! With just 60 days left until major tax law changes take effect, this article explains the steps you need to take to ensure you're fully compliant. Discover essential tax reporting guidelines, critical resources, and strategies to protect your crypto investments in the evolving regulatory landscape.

Marc A Carignan

11/2/20243 min read

If you’re a crypto investor paying taxes in the United States, the clock is ticking. As of November 1, 2024, you have exactly 60 days to take action before new tax reporting laws go into effect on January 1, 2025. This unique window offers a once-in-a-lifetime chance to bring your crypto records up to date with the IRS. Here’s what you need to know to stay on the right side of the law and avoid potential penalties.

Why These Next 60 Days Are Critical

Starting in 2025, U.S. exchanges will implement new IRS reporting requirements similar to those used in traditional finance. If you’ve ever received a 1099 form from your bank or broker, you’re familiar with this. Now, a new 1099-DA form (for Digital Assets) will be issued for crypto transactions, which will automatically report your activity to the IRS. The IRS will be monitoring crypto transactions with unprecedented rigor, so this is your last opportunity to ensure your records are accurate and up-to-date.

Key Reporting Rules You Need to Know

Whether you’re in the United States or abroad, if you’re a U.S. taxpayer, you are required to report all crypto transactions, especially sales or swaps from one cryptocurrency to another. That means every trade, from Bitcoin to Ethereum or any other crypto, counts as a taxable event and must be included in your tax filings.

Starting January 1, you’ll need to adopt the First In, First Out (FIFO) method for reporting gains and losses. This could impact your strategy if you’ve previously used different reporting methods. Additionally, each account will be treated individually, so if you trade on multiple exchanges, you’ll need separate records for each.

Transition Relief: Your Chance to Correct the Past

The IRS is offering what’s called a “transition relief” or “safe harbor” period, allowing you to review and amend any past missteps in your tax filings. For example, if you haven’t reported correctly in previous years or used various accounting methods, this is your chance to make those adjustments before stricter enforcement begins.

Free and Paid Resources to Help You

One invaluable resource for crypto investors is CryptoTaxAudit. This service, founded by Clinton Donnelly, provides free tools that can help you understand these new reporting requirements and verify your tax compliance. You can access these free resources at CryptoTaxAudit.com/1099. If you’re already behind in your crypto filings or need professional guidance, Clinton’s team offers paid services for more intensive support.

Key Steps to Prepare Before the Deadline

Snapshot Your Transactions: Take regular snapshots of all your transactions from each exchange you use, whether that’s Coinbase, Kraken, Binance, or others. Monthly snapshots are recommended if you trade frequently; quarterly may be sufficient for less active traders. Downloading these records is essential as the IRS holds you responsible, even if an exchange goes out of business.
Set a Clean Slate on January 1: After the clock strikes midnight on New Year’s Eve, record all your crypto holdings as a baseline for the new year. Detail each asset and where it’s held, as this will be the starting point under the new laws.
Track Every Transaction: Every fraction of a coin matters, especially as values rise. Track all holdings accurately to avoid any discrepancies that could lead to audits or penalties.

Don’t Risk Penalties or Worse

With thousands of new IRS agents, AI-powered profiling, and direct exchange reporting, the IRS is increasingly prepared to detect any unreported crypto income. Avoid potential penalties—and protect your freedom—by making sure your records are thorough and compliant.

Closing Thoughts

As we move into 2025, this regulatory shift marks a new chapter for crypto investors, one that brings both responsibility and opportunity. Take these final 60 days to ensure that you’re prepared, compliant, and positioned for the future. For more insights and resources, check out CryptoTaxAudit.com and reach out to their team for any specific tax concerns.

Get ready for a new era in crypto with a clean slate and peace of mind.