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Tax Time Gone from Sour to Sweet

April 14, 2023 | Written by: Courtney Visser
Bitcoin on top of 1040 tax return
In August 2022, Niko received a letter in the mail from the IRS informing him that he owed over $600,000 in taxes for the year 2020. He couldn’t believe his own eyes! In a panic, he wondered how this could be possible. The notice stated that he made over $1.3 million that year, but he was positive that he hadn’t made that much. 

His thoughts raced by as he tried to make sense of everything. Then, he remembered something that might be of help to him: he had purchased Audit Defense while filing his taxes through TurboTax that year.

Nervous and in shock from the notice he had just received, Niko immediately called TaxAudit and was connected with the Customer Service Department. The Customer Service Representative explained the process to him, along with how to use the Message Access Portal. Here, Niko would be able to communicate with his representatives and easily upload the documents he would need for his case.

Next, Niko was put in touch with a Case Coordinator who helped him gather all the documents necessary for his case. Then, they asked for a picture of his ID so that those working the case could represent them with a digital Power of Attorney. After collecting all the necessary paperwork, the Case Coordinator informed Niko that a Tax Professional had been assigned to him.

The very next day, Niko’s Tax Professional, Michele, reached out to him. She had evaluated Niko’s return along with the notice from the IRS. She pointed out that Niko had failed to provide several income documents to the IRS when he filed his 2020 taxes. All of these were related to cryptocurrency income that equaled up to $1.3 million in small gains and losses, which Niko was unaware of. This is what resulted in him owing $600,000 in taxes.

Michele explained to Niko that he needed to report each crypto sale he made. She also explained the convenience of using a crypto portfolio tracker, which would keep track of all his gains and losses. Then, she requested the different forms she would need from him in order to respond to the IRS and resolve his case. This included a 1099-K for the cryptocurrency, a 1099-INT for the interest gained, and a Statement for Capital Loss Carryover, which would let the IRS know that he would correct the capital loss carryover from 2020 to 2021.

Once Michele had received the paperwork she would need to properly report Niko’s income, she sent it over to the Quality Control team to be checked for accuracy. Once approved, it was sent to the IRS. It took the IRS several months to respond due to the backlog that was caused by the coronavirus pandemic but, once Michele and Niko heard back, they received great news: the IRS had accepted the submitted paperwork, and Niko would only owe $145 instead of over $600,000! He was ecstatic and more than grateful to Michele for all of her hard work in resolving his case - and for saving him such a colossal amount of money!

Niko had this to say about his experience:

“I recently had the pleasure of working with Michele from TaxAudit and I must say that I was blown away by her professionalism, expertise and willingness to go above and beyond to resolve my tax audit. Michele was incredibly patient with me and took the time to explain every detail of my tax situation in a clear and concise manner. She was also very responsive and made sure that all my questions were answered in a timely manner. Her knowledge and expertise in tax matters were evident from the very beginning and she was able to provide me with sound advice that helped me to navigate my tax audit with ease. Overall, I am extremely impressed with TaxAudit's exceptional customer support and I would highly recommend them to anyone who needs help with their tax audit. If you have the opportunity to work with Michele, you are in great hands. Thank you, Michele, for your outstanding service and support!”

*Some names and identifying details have been changed to protect the privacy of the individuals

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