Still Haven’t Filed Your Crypto Taxes? Serious Consequences Await!
Costly Late Filing Penalties
Once April 15 passes, the IRS begins enforcing a late filing penalty of 5% of your unpaid tax per month, up to a maximum of 25%. If you're more than 60 days late, there’s a minimum penalty of $510 or 100% of the unpaid tax, whichever is less. For instance, if you owe $3,000 and delay filing for three months, you're looking at an additional $450 penalty. These numbers might seem small at first glance, but the longer you delay, the worse it gets—especially for high-volume crypto traders who owe large tax sums.
Late Payment Charges Add Up
Even if you’ve filed, but haven’t paid, you’ll still face financial consequences. The IRS adds a 0.5% penalty per month on the unpaid amount, capping at 25%. This penalty is compounded with daily interest, calculated at the federal short-term rate plus 3%. Suppose you owe $3,000 and don’t pay for four months: you’d face a penalty of 2% or $60, and interest might add another $25–$40 depending on current rates. These charges are completely avoidable by filing and paying on time—or at least communicating with the IRS.
Crypto Reporting Is on the IRS Radar
With the rise in digital asset investments, the IRS has sharpened its tools to track crypto activity. In 2022, they sent over 10,000 letters to crypto holders suspected of underreporting transactions. Now, major crypto platforms like Coinbase and Kraken report directly to the IRS. This means it’s no longer safe to assume your crypto trades fly under the radar. Unreported income, even small amounts, can lead to audits, back taxes, and heavy penalties. Example: Real Penalties in Action
Consider the recent case of Waylon Wilcox, a Pennsylvania man who flipped over $13 million worth of NFTs and didn’t report a dime of it to the IRS. In April 2025, he pleaded guilty to failing to report his income and now faces up to six years in federal prison, along with back taxes and hefty fines. His case shows the IRS isn’t just targeting Wall Street traders—they're going after everyday individuals who ignore crypto tax obligations.
Extension Isn’t a Free Pass
If you’re overwhelmed and can’t file by April 15, submitting IRS Form 4868 gives you an automatic six-month extension—until October 15—to file your return. However, this does not extend the deadline to pay your taxes. Any unpaid balance will still accrue penalties and interest from April 15 onward. So, even if you file for an extension, make sure you estimate and pay what you owe to avoid financial damage.
Correcting Past Mistakes
If you’ve skipped filing in previous years or realize you've made errors in your crypto tax reports, the IRS allows you to amend your returns using Form 1040-X. This process can help you avoid even bigger legal trouble down the line. You typically have three years from the original filing date to correct a return and claim a refund, or indefinitely if you owe more tax.