It’s easy to miss something on your crypto tax return, especially when you are tracking transactions across multiple wallets, exchanges, and blockchains. Maybe you forgot to report staking income. Or you used the wrong cost basis method. These mistakes happen, but they don’t have to cost you in penalties or stress.
The IRS allows you to fix your crypto tax return through an amendment. Whether you missed reporting capital gains, NFT sales, or DeFi earnings, filing an amended return helps you stay compliant and avoid future issues. But how can you file an amended return?
This guide answers the above question in detail. It will tell you exactly when and how to revise your crypto tax return. You’ll learn the forms to use, the timelines to follow, and how to get it done with clarity and confidence. So, let’s begin!
When Should You Amend Your Crypto Tax Return?
US crypto tax returns can get complicated, and it’s not uncommon to find mistakes after filing. The IRS provides the option to amend your return when you’ve made specific types of errors. If you missed reporting income from staking, trading, or airdrops, or you incorrectly calculated your gains or losses, it’s time to consider filing an amended return.
You should also modify your return if you:
- Reported incorrect wallet addresses or transaction amounts
- Claimed the wrong filing status
- Left out DeFi income or NFT sales
- Forgot to include income from centralized or decentralized exchanges
- Used the wrong accounting method
Correcting now can prevent penalties later. If your mistake resulted in underreporting income, the sooner you fix it, the better your chances of avoiding an IRS audit or interest charges.
Read More: Crypto Tax Evasion Penalties In The US
When Don’t You Need to File an Amended Return?
Not every mistake on your crypto tax return requires an amendment. If you discover a minor math or clerical error, like a small calculation mistake or a mistyped wallet address, you don’t need to file Form 1040-X. The IRS typically corrects these automatically and sends you an updated notice or refund if necessary.
You also don’t need to amend your return if the crypto platform you used issues a corrected Form 1099 after you’ve already filed, unless the correction materially affects your tax calculations. In such cases, it’s best to consult with a tax professional to evaluate whether an amendment is needed.
Step-by-Step: How to Amend Your Crypto Tax Return
Amending your crypto tax return is a simple process when you know which steps to follow. If you’ve missed reporting crypto income, misclassified a transaction, or used the wrong cost basis, this is how to correct it properly.
Step 1: Collect All Relevant Crypto and Tax Documents
Start by gathering your original tax return and all related documents. This includes:
- Your previously filed Form 1040
- Crypto transaction records (wallet and exchange CSVs, DeFi logs, NFT sales)
- Any 1099 forms issued by exchanges (e.g., 1099-MISC, 1099-B, or 1099-K)
- Supporting documents for corrections (like staking reports, corrected 1099s, etc.)
You can use a crypto tax software like KoinX to regenerate your reports if you’ve found new transactions that weren’t originally included.
Step 2: Generate Updated Crypto Tax Reports
You’ll need accurate reports to reflect any updated gains, losses, or income. Make sure your crypto tax reports include:
- Form 8949 (updated capital gains/losses)
- Schedule D (summary of gains/losses)
- Schedule 1 or Schedule C (if crypto income is involved)
Step 3: Complete IRS Form 1040-X
Form 1040-X is the official IRS form for amending your return. You’ll need to:
- Enter original figures (Column A), the changes (Column B), and corrected totals (Column C)
- Include updated totals for income, deductions, and tax liabilities
- Provide a clear explanation in Part III of why you’re amending (e.g., “Missed reporting staking rewards of $1,200 in Schedule 1”)
Make sure you use the correct tax year form of 1040-X. For example, if you’re amending your 2023 return, you must use the 2023 version of Form 1040-X.
Step 4: Attach All Required Schedules and Documents
In addition to Form 1040-X, attach any schedules that changed as a result of your corrections, including:
- Form 8949 for updated capital gains
- Schedule D for gain summaries
- Schedule 1 or C for income
- Any 1099 forms or crypto income reports that support your changes
The IRS uses this documentation to validate your changes, so accuracy is essential.
Step 5: Submit Your Amended Return
For tax years 2019 and later, you can e-file Form 1040-X if your original return was e-filed. Otherwise, you’ll need to print and mail it.
Mail your completed Form 1040-X, schedules, and supporting documentation to the IRS address provided in the instructions for your state of residence. Always retain a copy of your amended return for your records.
Read More: How to Report Crypto On Taxes?
How Long Do You Have to Amend a Crypto Tax Return?
The IRS gives taxpayers a defined window to file an amended tax return, especially if you are doing so to claim a refund. For crypto investors, timing is important, especially if you discover missing income or incorrect cost basis calculations from earlier years.
You typically have three years from the date you filed your original tax return to submit an amendment. If you paid taxes late, then the deadline becomes two years from the date you paid the tax, whichever is later.
Let’s say, if you filed your 2022 tax return on April 15, 2023, you have until April 15, 2026, to file an amended return. |
Keep in mind, if you’re filing to correct an error but not to claim a refund, the IRS generally allows you to edit returns beyond this window. However, any refund due will be forfeited if you’re outside the time limit.
What Happens After You File the Amendment?
Once you’ve submitted your amended crypto tax return, your job isn’t done just yet. The IRS needs time to review your changes, and there are a few things you should know about what comes next.
Processing Timelines
The IRS typically takes up to 16 weeks to process amended returns. This timeline can extend during busy tax seasons or if additional documentation is required. If you mailed a paper Form 1040-X, processing could take even longer.
To track your amendment, you can use the IRS’s “Where’s My Amended Return?” tool. It updates every three weeks and requires your Social Security number, date of birth, and ZIP code.
IRS Follow-Up or Communication
In most cases, you won’t hear from the IRS unless they need clarification. If your amended return results in a higher refund, the IRS will issue the additional payment via direct deposit or check, depending on what you selected. If you owe more tax, you’ll receive a notice detailing how much to pay and by when.
Note: Ensure to keep a copy of your amended return and all supporting documentation. If the IRS has questions in the future, having clear records can save time and reduce stress.
Federal vs State: Do You Need to Amend Both?
If you’ve amended your federal crypto tax return, you might also need to change your state return. This depends on your state’s tax rules and how closely your state return is tied to your federal filing.
When to Correct Your State Return?
Most states require you to file an amended state return if you’ve made changes that affect your income, deductions, or credits reported on your federal return. Since crypto gains and income impact your adjusted gross income (AGI), an amendment at the federal level often affects your state return, too.
For example, if you updated your federal return to include missing DeFi income or revised NFT capital gains, those changes must be reflected in your state filing, especially in states that use the federal AGI as a starting point.
How to Modify Your State Tax Return
Each state has its own forms and processes for amendments. Some accept amended returns electronically, while others require a paper filing. You’ll typically need to include a copy of your amended federal Form 1040-X with your state amendment and clearly explain the changes made.
Always check your state’s tax authority website for specific instructions. Amending both returns accurately ensures consistency and reduces the risk of penalties or audits at both levels.
How KoinX Helps You Amend Your Crypto Taxes?
Correcting your crypto tax return requires accurate data, clean records, and confidence in your numbers. If you’ve made a mistake, whether it’s missing a transaction or misreporting staking income, KoinX can help you fix it efficiently.
Consolidates All Your Transactions in One Place
KoinX integrates with major exchanges, wallets, and blockchains, helping you track every transaction. From spot trades to DeFi activities, your entire crypto history is pulled together in one unified dashboard. This makes it easier to identify what may have been missed in your original return.
Accurate Capital Gains and Income Tracking
With support for real-time tax calculation, KoinX helps you track your capital gains, losses, and crypto income from sources like staking, airdrops, and mining. When you amend your return, these figures are critical for updating Forms 8949 and Schedule D accurately.
Downloadable Tax Reports for Refiling
If you need to revise a previous year’s return, KoinX lets you download reports for specific tax years. You can filter data, validate transactions, and generate corrected reports based on IRS guidelines, helping you prepare for your 1040-X with clarity.
By joining KoinX, you reduce the chances of recurring errors and ensure your amended return reflects your complete crypto tax position.
Conclusion
Amending your crypto tax return is not just about fixing past mistakes, it’s about staying proactive and compliant with IRS requirements. Whether it’s missed income or incorrect capital gains, taking the time to correct your return can save you penalties and stress down the line.
With KoinX, you can simplify the process by accessing complete transaction records, accurate tax calculations, and downloadable reports. Start reviewing your past returns today and use KoinX to stay on track with your crypto taxes.
Frequently Asked Questions
Do I Need to Amend If I Forgot Airdrop Income?
Yes, you should amend your return if you forgot to report airdrop income. Airdrops are considered taxable as ordinary income at the time of receipt. Altering helps you stay compliant and avoid future penalties for underreporting income on your original crypto tax filing.
Can I Still Claim Crypto Losses in an Amended Return?
Yes, you can claim crypto losses in an amended return if they were not included earlier. This may help offset capital gains or reduce taxable income. Be sure to include accurate records and update Form 8949 and Schedule D when submitting the amendment to reflect those changes.
Do DeFi Earnings Require Amending If Previously Unreported?
If you earned income from DeFi protocols and did not report it, you must file an amended return. These earnings are typically taxed as ordinary income. Correcting the oversight early through amendment ensures accurate tax reporting and reduces the risk of penalties or interest from the IRS.
Will Amending My Return Trigger an Audit?
Filing an amended return doesn’t automatically trigger an audit. It’s a proactive step toward compliance. However, all amendments are subject to IRS review. Ensuring that your corrections are accurate and well-documented can help reduce scrutiny and demonstrate good-faith efforts to meet tax obligations.
