What To Do If You Forgot To Pay Taxes On Stocks Or Cryptocurrency

One of the best ways of increasing your income and making your money work for you is to invest in stocks or cryptocurrency. However, unless you use a tax-advantaged account, you have to declare your gains and pay taxes. If you’ve forgotten to do this, you should speak to a Louisiana tax resolution expert, who can help you with debt settlement and filing back taxes.

Your tax professional will go through your statements and make sure everything is listed correctly. That way, you don’t risk getting audited, which could lead to hefty fines or even imprisonment. What’s more, the specialist will help you minimize your tax burden the next year by helping you use all your tax-free accounts and showing you how tax loss harvesting works.

WHAT TO DO IF YOU FORGOT TO PAY TAXES ON STOCKS OR CRYPTOCURRENCY

People who make money from stocks or cryptocurrency usually have to pay taxes on it. The penalty for not declaring these gains on your tax return can be harsh, especially if a significant amount of money is involved. If you’ve noticed that you’ve forgotten to pay taxes on stocks or crypto, you should contact a tax specialist for advice.

While you’re unlikely to face serious consequences if you’ve only gained a small amount, it’s better to amend your tax return. This reduces the chances of an audit, which can be expensive and time-consuming. Your tax expert can also show you how you can minimize your taxable income in future years, so you don’t have to deal with this problem again.

How Crypto Taxes Work

When you buy cryptocurrencies and they gain in value, you might convert them into dollars or exchange them for other cryptocurrencies. Taxable events include exchanging your crypto for dollars, swapping from one coin to another one, and even using crypto to pay for something. The tax rates depend on the length of ownership and the amount of gains you’ve made.

In 2022, capital gains below $41,675 are not taxed. The amount above $41,675 and below $459,750 is taxed at 15%, and anything above that is taxed at 20%. It’s important to remember that this is your total capital gains tax allowance, so it includes money you made through cryptocurrencies, stocks, selling valuables, and selling real estate.

How Stocks Are Taxed

Stocks are taxed in the same way as cryptocurrency. If you have sold both crypto and stocks this year, you have to add up the total gains to determine your tax rate. People who are in a high income tax bracket should try to hold their stocks for more than a year to take advantage of the above-mentioned capital gains tax rates. Short-term gains are taxed at the same rate as your income. To complicate matters further, you might also have to pay taxes on dividends.

There are two types: qualified and unqualified. The former are taxed at your income tax rate, while the latter are taxed at the capital gains rate. If you have any losses, you can offset them against your gains to lower your bill. This strategy is called tax loss harvesting. As you can see, taxes on stocks are very complicated, and you should hire a Louisiana tax resolution specialist to help you sort through them.

What Happens if I Don’t Pay Taxes?

People who don’t report taxable activity might face severe consequences. If the IRS suspects that there are undisclosed gains, they might audit you. You could also be the victim of a whistleblower, who reports you to the IRS and triggers an audit. This process is complex and lengthy, and you’ll have to provide all your financial documents. Depending on the amount you owe, your failure to disclose your income might count as tax evasion or fraud.

In some cases, this can lead to heavy fines and even time spent in jail. Generally, the IRS only looks back for three years, but there is no statute of limitations on fraud, so you might be at risk even years down the line. If you’ve failed to declare any gains or dividends, you should contact your tax expert as soon as possible. They can help you with filing back taxes and debt settlement, so you can avoid criminal charges.

LOUISIANA TAX RESOLUTION: HOW TO PREVENT PROBLEMS

The IRS has almost endless collection power. They can not only gain access to your savings accounts and investments, but they can also confiscate your home, your possessions, and a part of your income. For this reason, you should always resolve problems as soon as possible. File your back taxes as soon as you can, figure out which of the IRS’s forgiveness programs works for you, and make use of all your tax-advantaged accounts in subsequent years.

Filing Back Taxes ASAP

Filing your taxes is always a good idea, whether you believe you owe the IRS or not. Sometimes, people come to us at Geaux and ask us to file their taxes and they end up receiving a refund because they overpaid throughout the year. Although you can file your own back taxes, it’s easier and safer to work with a professional because they can make sure nothing’s missing, and they can help you avoid any fines or penalties.

Debt Settlement

If you haven’t filed or paid your taxes and you owe the IRS, it’s likely that you’ve accumulated penalties on your account. Generally, you have to pay 5% extra for every month you don’t file, up to a total of 25%. People who don’t pay get 0.5% of the total balance added to their account every month. Additionally, there is interest, which accumulates daily.

Taxpayers who have fallen behind should ask their specialist about the IRS forgiveness program, which is designed to help those with tax debt. The easiest option is to make an installment agreement and pay off the outstanding balance over several years. In some cases, you can also compromise with the IRS or even get your tax debt written off, for example if it’s your spouse’s fault and you were not aware of the problem when it occurred.

Using All Your Tax-Advantaged Accounts

You don’t have to pay taxes on your stock and crypto gains if you invest in the correct accounts. There are several options, and your tax expert can take you through them. Many of the popular pension accounts, such as the 401(k) or the Roth IRA, are either taxed at source or only taxed when you take the money out to pay for your retirement. Therefore, your stocks and crypto can grow untaxed for many decades.

Another great option is the Health Savings Account, or HSA. Each year, individuals or families can put several thousands of dollars into this account. The money isn’t taxed, and any gains are also tax-free. In your working years, you can use the HSA to pay for many of your healthcare needs, and after you turn 65, it can be used for all expenses, like a regular retirement account.

Not paying tax on stocks and cryptocurrency can have serious consequences, such as a heavy fine or even imprisonment. If you’ve forgotten to declare gains on your return, you should reach out to a Louisiana tax resolution specialist. Contact us at Geaux Tax Resolution and book an appointment. We’ll be happy to help you with filing back taxes and debt settlement.

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