What happens if you don’t pay taxes on your crypto holdings?

💡 DMK Insight

Ignoring crypto taxes isn’t just risky—it’s a potential financial disaster. With regulatory scrutiny ramping up, traders need to be aware that failing to report gains can lead to severe penalties. The IRS has been increasingly aggressive in tracking crypto transactions, and the consequences of non-compliance could include fines that far exceed any potential gains from trading. It’s crucial to understand that the tax implications can vary significantly based on how long you’ve held your assets. Short-term gains are taxed at ordinary income rates, while long-term holdings can benefit from lower capital gains rates. This distinction can influence your trading strategy, especially if you’re considering taking profits. Traders should also keep an eye on upcoming tax deadlines and ensure they have accurate records of all transactions. The real kicker? If you’re audited and can’t prove your holdings, you could face even harsher penalties. So, as we approach the end of the fiscal year, make sure to review your portfolio and consult with a tax professional to avoid any nasty surprises. Watch for IRS updates on crypto regulations, as they could impact your trading decisions moving forward.