In 2017, bitcoin went from trading at below $1,000 early in the year to a peak of over $19,000 in December, while other virtual currencies also enjoyed gains.

For anyone who ignored the common crypto-slang advice to "HODL," to hold on to your investment for dear life, and decided to cash out, those profits are considered income by the IRS.

If you sold crypto-coins or used crypto to buy anything in 2017, you probably owe the IRS taxes, says Ryan Losi, a certified public accountant and the executive vice president of Virginia accounting firm PIASCIK.

"For Americans there is no free lunch," Losi says. "If you're richer tomorrow than you were today, it is likely you have some tax burden associated with that."

And not paying up can have consequences.

If the IRS discovers you under-reported your income when you file your taxes in April, "there is a failure-to-pay penalty of 0.5 percent per month, starting after the month in which it was due," Losi explains. "Then there is a failure-to-pay penalty of 5 percent on top of that." Then, there's interest.

To avoid penalties, here's what you need to know about paying taxes on bitcoin.