Help, please help me understand the IRS. I spent like 25k of my money on crypto, moved it around a bunch in the exchanges trying to time the market for a year, and a few years later come out with less but still close to the same when I cashed out. IRS is trying to say I had 170k of income in 2021.

Okay, so let's say I bought a Bitcoin for $50,000, then I turned around and sold it for $49,000. The IRS is telling me that's $49,000 income for 2021. Or if I solid it for $50,002, that's $50,001 income. See, I see that as $2 income. (Completely hypothetical, I didn't buy bitcoin really).

That's basically what's going on in a nutshell. Uphold, Robinhood, Binance, all reported to the IRS for me automatically (I remember I think it was Uphold that initially sent out bad tax records and had to "apologize" to everyone and resubmit to the IRS). Not sure how much that has to do with it.

Anyway, it looks like they are treating every single sale for USD as a taxable event. I was under the impression if it's on exchange and I'm just doing quick trades back and forth to switch/convert/trade for different cryptos that wouldn't happen.

Am I completely screwed? Should I have been parking in tether this whole time to switch between crypto coins?

It's so frustrating how complex this is and almost no tax accountants know anything about crypto to answer these questions.

It's pretty much impossible to talk to the IRS it seems and of course it's still corrupt and won't tell you how much you owe.

Not only that, I don't think they called me. I missed the mail they sent me with a deadline to tell them if I contest the amounts....

I'm not running from the law or ignoring it or evading it, but I didn't file it on my return because I know I came out of my trades overall making less than I put in, so in my mind, that's no income, so it wouldn't be taxed.

I may have made a horribly uneducated decision.

Any advice is appreciated.