Traded cryptocurrency in 2021? Here's how to approach taxes.

FILE - In this Feb. 9, 2021, file photo, the Bitcoin logo appears on the display screen of a cryptocurrency ATM in Salem, N.H. Alternative finance has captured the attention of investors across the U.S. As the 2022 tax season approaches, traders who are new to cryptocurrency taxation will have to contend with the IRS' rules for reporting on taxable events. (AP Photo/Charles Krupa, File)

Professionals have a major piece of advice for those who traded cryptocurrency for the first time last year: Take your tax prep seriously.

The IRS has been zooming in on cryptocurrency reporting with increasing interest in recent years. And the last thing you want is to lose money and time reconciling your tax liability, says Douglas Boneparth, a New York City-based certified financial planner.

So as tax season gets into full swing, here's a quick guide to which cryptocurrency activity is reportable, how it's generally taxed and the best ways to prepare.

WHAT YOU NEED TO REPORT TO THE IRS

The IRS treats virtual currencies as property, which means they're taxed similarly to stocks. If all you did was purchase cryptocurrency with U.S. dollars, and those assets have been sitting untouched in an exchange or your cryptocurrency wallet, you shouldn't need to worry about reporting to the IRS this year.

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