{"id":42321,"date":"2024-12-17T09:42:15","date_gmt":"2024-12-17T17:42:15","guid":{"rendered":"https:\/\/bitcoin.tax\/blog\/?p=42321"},"modified":"2024-12-23T23:39:44","modified_gmt":"2024-12-24T07:39:44","slug":"safe-harbor-tool-irs-2024-28","status":"publish","type":"post","link":"https:\/\/bitcoin.tax\/blog\/safe-harbor-tool-irs-2024-28\/","title":{"rendered":"Safe Harbor rules from IRS Rev. Proc. 2024-28"},"content":{"rendered":"\n

Understanding Safe Harbor rules for 2025<\/strong><\/h2>\n\n\n\n

Starting January 1, 2025, you’ll need to track your cryptocurrency gains and losses separately for each wallet or exchange account you use. The IRS understands this is a big change, so they’ve provided “safe harbor” rules to help you transition your existing holdings.<\/p>\n\n\n\n

In their Revenue Procedure 2024-28<\/a>, section 5, the IRS details the rules that give you protection from having your historical calculations questioned in an audit, as long as you follow the steps to properly allocate your existing crypto holdings to your various wallets. The key is that your records need to match your actual wallet balances as of January 1, 2025.<\/p>\n\n\n\n

You have two ways to make this allocation:<\/p>\n\n\n\n

Specific Unit Allocation<\/strong><\/h3>\n\n\n\n

Think of this as manually assigning specific purchases to specific wallets. For example, you could decide that the Bitcoin you bought in March 2023 should be assigned to your Coinbase wallet, while the Bitcoin from July 2024 goes to your hardware wallet. You need to complete this before making any sales in 2025. <\/p>\n\n\n\n

Global Allocation<\/strong><\/h3>\n\n\n\n

With this method, you create a rule for how you’ll assign your crypto to different wallets. For instance, your rule might be “assign my oldest purchases to Wallet A, then Wallet B.” You need to document your rule before January 1, 2025, but you have until your 2025 tax return is due to complete the allocation.<\/p>\n\n\n\n

Important Points to Understand:<\/em><\/p>\n\n\n\n