Crypto tax mistakes that can inflate what you owe

1) “Unknown cost basis”

If software can’t see your original buys (or deposits), it can’t calculate gains correctly. Worst case: it assumes $0 cost basis.

• Symptom: Gains look massive even though you didn’t profit.
• Fix: Add missing exchanges/wallets, reconcile deposits, and verify buy history.

2) Transfers treated like sells

Wallet moves should match A → B. If they don’t, many tools record a “sell” on the send and a “buy” on the receive (or worse).

• Symptom: Lots of taxable events you don’t recognize.
• Fix: Ensure every wallet/exchange is included and label transfers properly.

3) Missing wallets or exchanges

One missing wallet can break the entire chain of cost basis and transfers. This is common with self-custody + multiple exchanges.

• Symptom: Unknown cost basis + unmatched transfers across the report.
• Fix: Inventory everything you used (even “just once” accounts).

4) DeFi misclassification

Bridges, LP tokens, lending, farming—DeFi doesn’t always map to a clean “trade.” Incorrect labeling creates incorrect outcomes.

• Symptom: Weird “income” lines or disposals you can’t explain.
• Fix: Reconcile DeFi activity and confirm how it’s categorized.

5) NFTs: fees, royalties, and contract activity

NFTs often include multiple fee types and marketplace contracts. If a tool misses part of the flow, the report goes sideways.

• Symptom: Missing proceeds/fees or “phantom” gains.
• Fix: Ensure marketplaces + wallets are included; review NFT transaction categorization.

Fastest path if your report is already a mess

If you have multiple wallets/exchanges, DeFi, NFTs, or multi-year activity, specialist cleanup can save a lot of time and prevent filing errors.

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