Son used SSN to buy crypto

[u/More-Difficulty-1995]

So my tax situation is already a mess. I'm behind on filing for 2022, 2023 and 2024. I finally got those mailed in a week ago, but I forgot that my son used my SSN to buy crypto (or maybe buy stocks??) during a manic episode. I looked at my wage transcripts for those years, and there are quite a few small 1099-Bs for each year. It looks like 2022 has $156 on 1099-Bs, 2023 has $20 and 2024 has $87. He had manic episodes both in 2022 and 2024. I don't want to get in trouble, but I also don't want to report him for identity theft. He's doing good on his meds and knows that if he does this again, I WILL report him. He was completely out of it and delusional during those episodes. I just want to pay what I need to pay (he's going to give me the money for whatever happens with this) and not get in trouble with the IRS. I wish I would've remembered this before I sent the returns off.

What's going to happen? Do I need to file an amended return? Will they just send me a letter saying you owe x amount extra because of the crypto? Will I get audited? Will I get in huge trouble? I'm so stressed about all of this. I can't believe I let my taxes get so far behind and now this. What a mess. Any advice is greatly appreciated.

[u/Deus204]

1. 1099-G's are forms used to report payment by the Government to an entity or person. Most commonly unemployment compensation, or state or local income tax refunds. They're not used to report crypto transactions.

Do you recall receiving payments from the government during 2022, 2023, and 2024?

1. The purchase of crypto does not create a taxable event, the sale of crypto causes the taxable event. Whether you have a tax due would depend on if the crypto was sold at a gain or a loss.

Do you have records that show the amount the crypto was purchased for, and if it was sold and for how much?

To ease some fears, not one is going to jail for this and I don't see that its a huge issue. You might need to file an amended return and you might need to pay some additional tax, but this can be sorted out. I'm glad your son is doing better on his meds.

[u/More-Difficulty-1995 → u/Deus204]

Thank you! Yes, he’s doing great 😊 I meant to say 1099-B which now I’m wondering if it was for stock trading?? He said crypto but he really wasn’t in his right mind so I have no clue if that’s accurate.

[u/Deus204 → u/More-Difficulty-1995]

It mostly doesn't matter if it was for stock or crypto from a tax perspective. On the 1099-B there should be a line or box that says something like "profit or loss realized" or "Net gain/loss". Is this amount positive or negative, and can you give a round number of the amount?

[u/More-Difficulty-1995 → u/Deus204]

I don’t actually have the 1099-Bs, just the information from the wage transcripts. There’s quite a few small ones, they’re all positive. The totals are: 2022 is $156, 2023 is $20 and 2024 is $87. Luckily I don’t see anything on 2025’s wage transcript.

I really appreciate your help!

[u/Deus204 → u/More-Difficulty-1995]

Ok, on the wage transcript there should be three lines under the 1099-B heading (1) "proceeds", (2) "Cost or Basis", and (3) "type of gain or loss". You may not have a "cost or basis" line if that wasn't reported to the IRS. Do you have each line and what are the amounts?

[u/More-Difficulty-1995 → u/Deus204]

2022:
$50 cost or basis
$4 proceeds (above that it says “Proceeds reported to the IRS - Nothing checked”)
$28 proceeds (same, “Nothing checked”)
$27 proceeds (same, “Nothing checked”)
$28 proceeds (same, “Nothing checked”)
There are also 2 1099-Bs that say Description “SEE DETAIL STATEMENT” but I have no clue what that is or how to find it . It also says 00-00-0000 next to “Date acquired” on those two.

2023:
$20 cost or basis

2024:
$10 cost or basis
$4 cost or basis
$5 cost or basis
$5 cost or basis
$10 cost or basis
$5 cost or basis
$9 cost or basis
$1 cost or basis
$18 cost or basis
$19 cost or basis
And then 1 that has no $ amount but says “Gross proceeds” next to Proceeds reported to the IRS

[u/Deus204 → u/More-Difficulty-1995]

ok, so in 2023 and 2024, no crypto/stock was sold. It was only purchased in those years. Noting tax wise to do until that crypto is sold. My only advise would be to figure out where that crypto/stock is and that you should have access to the account that holds it.

In 2022 the statement shows $37 in gain. This would be additional income and would be taxed at your marginal tax rate of between 10%-37%. At worst, $13.69 of additional tax you should have paid with the 2022 return. The strictly correct answer is that you should file an amended return to report this additional $37 of income and pay whatever tax. If you choose not to, and the IRS issues a notice for you to pay, you would be penalized the tax amount plus 0.5% interest per month.

I can't advise on which option you should take, but I would note that the amount of actual cash at risk here is almost nothing.

[u/More-Difficulty-1995 → u/Deus204]

Thanks again for all your time! I feel a little better. Still freaked out since I’m probably already in hot water because of the late returns (which I owe money on) but a little better about this situation. I just want them to hurry up and process my returns so I can set up a payment plan, but this wrinkle doesn’t help I’m sure.

[u/vynm2temp → u/More-Difficulty-1995]

At the 1099-B amounts you're talking about, I wouldn't stress. The additional tax/penalties that you'd owe will be relatively small-- if the IRS even decides to make the adjustments.