The errors below are ordinary, common and expensive, and every one of them is avoidable with a habit rather than with expertise. None of this is complicated. It is just easy to not do until the year is over and the records have gone.
The seven
Thinking a swap is not a sale
The most common and the most expensive. A year of active rotation can produce a substantial tax bill on a portfolio that finished flat, because every swap realized a gain along the way.
Not filing a losing year
Losses offset gains, and beyond that a limited amount of ordinary income each year, with the rest carried forward indefinitely. Skipping a bad year discards an asset that would have reduced a future bill.
Treating a blank 1099-DA basis as zero
A missing figure means the broker does not know it, not that it is nothing. Reporting zero basis means paying tax on the entire proceeds including the money you originally put in.
Losing access to an exchange before exporting
Platforms restrict old data, close accounts and fail. The export takes two minutes while the account still works and is a research project afterward.
Not recording transfers between your own wallets
Unlabeled, they look like a sale from one wallet and a purchase into another. Software will often flag them as disposals with unknown basis, which inflates gains that never happened.
Forgetting that rewards were income when they arrived
Staking and airdrop income is owed for the year it was received, at that value, whether or not the token is still worth anything. Selling later at a loss is a separate capital event.
Assuming nothing onchain is visible
Everything onchain is permanent and public, and analysis of it is a mature industry. The transactions you made in 2021 will still be readable in 2041.
Two things that do not work
Moving to a wallet does not reset anything. A transfer is not a disposal and it does not erase a gain. The basis and the holding period travel with the coins.
Not reporting is not a strategy. Brokers report, chain analysis is routine, and there is no statute of limitations on an unfiled return. This is a place to get advice rather than to improvise.
What to do instead
Export everything at the end of each year. Keep a list of every address you control. Note the value of anything you receive on the day it arrives. Record transfers between your own wallets. Then take that to somebody qualified, once, and find out what your particular situation actually requires.
Common questions
I have not reported crypto for several years. What now?
It is a common situation with established procedures for catching up, and it is a conversation to have with a professional rather than something to improvise. It does not improve on its own.
Can I reduce what I owe by moving crypto to a wallet?
No. A transfer between wallets you control is not a disposal and changes nothing about gains already realized. Basis and holding period move with the coins.
Is it worth using tax software?
For more than a handful of transactions, usually yes, because reconstructing lots by hand is slow and error prone. Review what it produces rather than filing it unread, particularly around transfers between your own wallets.
Where to go next
Confused about your own records?
We cannot prepare your return and we can help you understand what your transaction history actually says, so the conversation with your accountant is a short one.