If you've received IRS Letter 6174 or 6174-A after filing your cryptocurrency taxes with Awaken, don't panic. These letters do not automatically mean you owe additional taxes or are being audited.
For Awaken users, one likely cause is that transactions reported on your exchange's Form 1099-DA were not properly reconciled before filing, resulting in transactions being categorized incorrectly on Form 8949.
Why Did I Receive This Letter?
If you received one of these IRS letters, your tax return may not match the transaction information your centralized exchange reported to the IRS.
In particular, your Awaken tax report may have included transactions in the incorrect Form 8949 categories:
Boxes I and L: Digital asset transactions not reported to the IRS on Form 1099-DA or another applicable broker statement.
Boxes H and K: Digital asset transactions reported on Form 1099-DA where cost basis was not reported to the IRS.
If your exchange reported your transactions on Form 1099-DA, but your tax return placed those transactions in boxes I and L, the IRS may have difficulty matching the information.
This doesn't necessarily mean your capital gains or losses were calculated incorrectly. The issue may simply be how transactions were categorized on your tax forms.
How Can I Fix This in Awaken?
Before filing your taxes, it's important to reconcile your exchange's Form 1099-DA with the transactions imported into Awaken.
You should also use the checkbox in Awaken that moves applicable transactions into Form 8949 boxes H and K, rather than I and L.
If you've already filed your return without completing these steps, you may need to generate corrected tax reports and determine whether an amended tax return is appropriate.
Note that boxes H and K apply when proceeds, but not basis, were reported to the IRS. Other reporting categories may apply depending on your Form 1099-DA.
Can Awaken Support Help Me?
Yes! If you've received IRS Letter 6174 or 6174-A, please reach out to Awaken Support.
Our team can help you:
Review your Form 1099-DA reconciliation.
Check whether transactions were incorrectly placed in boxes I and L instead of H and K.
Update your tax report settings and generate corrected reports.
Understand what information you may need to provide to your tax preparer.
You can contact our support team directly through the in-app chat.
Important: IRS Letters 6174 and 6174-A do not require a direct response. Receiving either letter does not automatically mean you need to amend your return. Awaken Support can assist with your crypto tax reports, but a qualified tax professional should advise you on whether an amended return is necessary.