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Have you encrypted? Here's how to avoid a check from the IRS

The IRS outlined reporting responsibilities for cryptocurrency users.

Here are some tips to help you stay on the right side of tax.

Think beyond sales: If you bought a cup of coffee from a merchant who accepts virtual currency, you must report it.

"You can get cryptocurrency as a gift or payment," Benson said. "It's a basic cost event, and you have to manually record the fair market value when you received it."

Trace everything: Keep records of your transactions and translate them into US dollars. At least you'll be ready if the IRS will come knocking.

"When you buy and sell coins, track the date and the amount paid," said Morin.

Do not assume that you can exchange cryptocurrency without taxes: Traders have made "similar" exchanges tax free of virtual currency in the past. Do not assume that the IRS will continue to allow this.

"Kind exchanges must be real property, like houses and buildings – they can not be coins," said Morin. If you have exchanged one virtual currency with another, you should still report the "similar" exchange to the IRS and track the base.

"The main problem with many of these transactions is that it will be better to try and do the best you can," said Morin. "Do the best you can, rather than completely avoid it".

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